First Group
Sector Outlook
1. Submit a hard copy to the instructor by the due date.
2. Email the presentation to sim@fisher.osu.edu for posting on the web site.
3. Dress for the presentation is business professional.
4. Presentation should be a maximum of 15 minutes (plus Q&A).
5. Grades will be based on the team performance.
a. It is OK if some team members do not speak during the presentation.
b. Let me know if a team member is not doing his/her part to help the team.
Format:
Overview
• What is the size of the sector? As a percent of the S&P 500?
• What are the various industries within the sector?
• What are the largest companies in the sector?
• How has your sector performed year-to-date/quarter-to-date?
Business analysis
• Analyze demand by reviewing
o Phase of the life cycle
o Classification by business cycle
▪ How will your projections be influenced by the US economy? Foreign economies?
o External factors
o The user and geography
o Input/output analysis
o Etc.
• Analyze supply by reviewing
o New capacity additions
o Etc.
• Profitability and pricing by reviewing
o The interaction of supply and demand
o Product segmentation
o Industry/sector concentration
o Ease of entry
o Strength of customers, suppliers
o Competition
o Substitution
o Etc.
Economic analysis
• Regression analysis is often useful for sectors/stocks that are highly correlated to a particular economic (or other) data statistics. For example, oil prices and Energy stock prices are highly correlated.
Financial analysis
• What are the sales and earnings growth rates of the sector, industry, major companies? How do these rates compare to history?
• Other
o What are margins? Operating? Net? R&D as a percent of sales? ROE? Turnover? Etc.
o How do current and future margins compare to the past?
o Is the sector a net user of cash or does it generate free cash flow?
o Are margins expanding, contracting, or remaining the same? Versus the market (e.g. S&P 500)
o Etc.
Valuation analysis (assignment #4)
• Consider P/E, P/S, P/B, P/CF, etc.
• Does valuation vary widely across the sector from industry to industry and company to company?
• Consider the P/E, P/S, P/B, P/CF, etc. of the sector and industries versus the market
• If the relative valuations (above) have expanded/contracted over the years then tell us why
• Do you think that valuations will expand, contract or remain the same for this group? Versus the market? Why?
• What does technical analysis (i.e. the charts) suggest? (e.g. is support/resistance forming, do you see trends?, etc.)
Recommendation
• Should the SIM portfolio over or underweight the sector relative to the S&P 500?
• What are the major positives that you foresee and the biggest risks to your recommendation?
• Within your sector, which industries would you over and underweight versus the S&P 500? Why?
Class Vote
• Majority rules.
Helpful Tip:
Review the prior quarter presentations on the web site for help with format and ideas.
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