Stock Report Instructions

125340 Stock Report Instructions

2020 Semester 2


This stock report is intended to be a sort of “capstone” assignment, that not only brings to bear much of what you have learned in 125340, but also what you have learned in other previous courses such as accounting, economics, marketing and management. We recognize that this is a LOT of work; that is why it is worth 30% of the course grade. But, done well, it will be a high point of your learning experience at University.

Those of you who take this on fully will produce a report that you will be proud to show to a prospective employer. We have had many students do exactly that, and get job interviews based on what they did.

Find your assigned stock in the file “Stock assignments” in the Stock report section on Stream. (this will be ready by at least week 3)

Use cross references (Yahoo vs Google, e.g.), checking ticker symbol, name and industry, to make sure you have the correct firm.

You must use “125340 Stock Report – TEMPLATE – 2020.2”


The “125340 Stock Spreadsheet TEMPLATE – 2020.2”

Other formats will not be accepted. We realize you may want to be more creative, but we have nearly 200 of these to grade, and it creates problems for us finding sections if you use different formats.

NB: in the spreadsheet, we will use a program to read your file, so e.g. if you do DDM valuation, your forecast dividend for 2021 must be in cell C16 of the DDM sheet; otherwise we’ll assume you didn’t do it.

Maximum of 4-5 pages for main part of report (not including appendix).

Do not change the single spacing of the report, or the font size of the text or headings (e.g. to increase the length of the report). Better that your report is short and save paper.

The final stock report is due 7 Sept, worth a total of 100 points, and is 30% of your course grade.

Do NOT print a copy of the report for us; if needed we will do that from Stream.

Do not:

use illegible graphs – too small, vague colors, etc. This wastes time, paper and ink

use large graphs. This wastes paper and ink

Either of these will reduce the “professional” component of your grade.

“Preliminary Submission”, 2 parts, due 24 August:

1. Business Description

a. See below for what should be in it

2. Preliminary valuation

a. at least one valuation method completed, with those Data entered into spreadsheet

Both of these will only be graded as:

5 points: ‘substantially done’

3 ‘weak’

0 nothing done

Both parts must be submitted (on Stream) using the appropriate pages from the templates, and will be checked with turn-it-in. You will be able to see your score after you submit, so that you will know if you need to make changes before the final submission. We require this preliminary submission to ensure you to start the assessment early. While we will provide some general feedback after this preliminary submission, we will not provide individual feedback.

A late submission will be accepted for 24 hours, with a 10% penalty. After that no submission allowed.

Both will be graded in more detail when the full report is submitted.

There is a detailed file “Preliminary submission instructions” in the Preliminary Submission section for the report on Stream.

Final submission due date:

Sept 7, 11:59pm. Submitted to Stream; will be automatically submitted to TurnItIn

Late submissions incur a 5% penalty per calendar day, or portion thereof.


The TurnItIn ‘score’ will be used to scale your report grade. e.g. if your turnitin score is 30% (meaning 30% of your report matches other online material), your final Stock Report grade will be 70% of whatever raw grade I assess. (I will ignore tables and references in that matching)

Note that since final grades are scaled to a normal distribution, the only relevant number here is how you compare with classmates. If everyone gets a turnitin score of 20%, then everyone is equal in how their raw grade is adjusted for the TurnItIn score.

For your perspective, historically I have found that good reports have turnitin scores from about 10-20%.

Note in particular, what does not go well is to simply copy and paste from published sources into your report. Even copying a short phrase here and there will show up as matches. I am not interested in what you found that someone else said about, say, Investment Risks. I am interested in your assessment and/or summary of what someone else said. (I don’t expect you to conduct primary research, but I do expect you to use your own words to describe/discuss what others have found)

If you cut/paste, not only will that increase your TurnItIn score (which is bad), but I will ignore those sections in my assessment (as though you didn’t do it), which also lowers your grade.


Page 1

Think of this page as an executive summary (a short summary of all pertinent facts in a document), and the rest of the report backs this up.

An investor should be able to look over this page, and have a pretty good idea of the most important facts and issues about the company, and what you (the analyst) think about it as an investment opportunity.

Note a few things here:

At top is your name, and statement that this is Student Research for 125340. This is to disclose to anyone who happens to read this, that it is not intended as investment advice.

Also at top is the Industry name and the Company Name. Below that is descriptive information, as well as your Recommendation.

Headings. Throughout, there are Styles used to make your life easier. If you haven’t learned about this feature in Word, this is a good time to do so (but not compulsory). When you set or change a style as a particular format, every area of the document that has been defined as that style will change accordingly.

On page 1, “Highlights” has been defined as Heading2 (see upper right of Windows ribbon; right-click on the Heading 2 button and select ‘modify’, to see or change the settings of this style).

You will also see “Paragraph Heading” (this is Heading3); you only need to use this when there is a subsection you want to identify. You won’t necessarily have this in every section.

Please do not keep the text intended just for you, such as “Heading2: Times New Roman”

In Highlights, you list key features about this company. These may be positive statements about management, new products, etc; or could be negative – warnings about potential risks. Think of these as what you would want to tell an investor client, if you only had 30 seconds to talk.

Page 2 +

Business Description

In this section you describe the firm’s “story”. What is their business/product, etc.? Are there multiple segments of the business? What is their industry? Is there something about their history that is important (founding, mergers, …)? What is their geographical coverage? Are there features about this company that sets it apart from the crowd? Typically (though there can be exceptions), discussion of management is not particularly special.

This business description section will usually be quite short, but after reading it, an investor should know what this company does, and have some idea about what you think is special about it (if anything).

As noted above, this is part of the Preliminary Submission. The closer this is to “complete” when you submit for the preliminary, the better off you will be for the final submission. NB: for the Preliminary submission, there is a separate template to use, but for the final you can simply paste that in here (perhaps after making revisions).

Industry Overview and Competitive Positioning

In this section you describe the industry for your target company. What does this industry do, what are major opportunities and risks to the industry (which will of course also affect your firm), and who are the major players? This is where you also discuss your target firm’s market share, and if they have any competitive advantage.


This is the section where you discuss valuation results.

You should use a minimum of 3 methods; you must use at least 1 relative valuation method and 1 absolute method. See text and notes for various methods available.

These methods must be clearly labeled.

For Absolute method; DDM and/or DCF

· DDM: acceptable (for B grade level for this section)

Must be multi-stage; forecast 4 years, then from terminal year, assume a reasonable terminal CF as discussed in class (in the text of your written report, you can discuss whether this is a valid terminal point or not). For details, see lecture notes on multi-stage DDM/DCF, and stock report spreadsheet template.

For “interim g” over first 4 years, use one of the non-historical methods for estimating g. Explain here how you did that, and this must match what you do in the spreadsheet.

· DCF: required for a possible A grade on this section. As with DDM, must be multi-stage etc as discussed above. Forecast cash flows should be shown in a table in the appendix along with the growth rates.

· For both:

· for the Risk-Free rate, use a constant 1%

· for the Market return:

· US stocks (most of you) use the SP500, monthly data, over 3 years (Jan 2016 – Dec 2019)

· NZ stocks, use the NZX 50 (monthly, 3 years)

· For terminal growth, use 2%

For Relative method; method(s) for forecasting PE must be stated; if comp co’s (company comparables), those comparables must be shown in appendix; if analysts, details must be in appendix.

For each method, you will have an estimated target price.

Final Estimation: From the 3 (or more) methods you use, make a judgement call on what the final target price should be. This will generally be a weighting, where you place the most weight on the method you deem most ‘correct’, and least weighting on a method you feel has problems (e.g. due to input information available). If you do this (recommended), include a small table showing your weights.

Risks to the Estimation: Your target price (and therefore recommendation) are probably most sensitive to some specific assumptions. Describe those here. This is not the place for firm risks, which comes later (see below).

This section should conclude with the same information at the top of page 1 – Target Price, Current Price, and Recommendation (buy, sell or hold).

Financial Analysis

In this section discuss anything pertinent to the financial statements. For example if you had to do something special to estimate future growth, you would discuss that here. Similarly, here is where to talk about DCF and what you had to do to get cash flows, or something unique about the earnings or dividend stream.

Investment Risks

Just as important as identifying positive aspects, is identifying the negative. In this section, discuss risks to the firm. A useful approach is SWOT and/or PEST, to help you think through the various possible risks and merits. It is not mandatory to include all of SWOT & PEST.

A brief summary of the most important ones will probably be on page 1.

Ethical issues

In your reading about the firm (news stories, annual reports, etc.), try to identify ethics issues that: a) the firm has identified and how they are dealing with them, and/or b) issues you observe that perhaps the firm has not acknowledged.

If you are unable to find anything, just say so in this section.

Cultural Issues

Additionally from your reading, discuss any strategies of the firm to develop business in international markets and any challenges on the cultural or multi-cultural issues.

As above, if you are unable to find anything, just say so in this section.


In general, tables that are too big for the main text, such as industry comparables, DCF details, potentially other tables you deem necessary. Do NOT include financial statements (that will be in your spreadsheet), and do not fill with fluff just to create extra pages.

Any table included here should be discussed (or at least mentioned) in the main text. Do not add interesting tables just to add pages.

Do not change to landscape orientation for any of these appendices.


Total 100 point report worth 30% of course grade.

Out of 100 points:

10 Preliminary submission
10 Page 1
10 Business description
15 Industry overview
35 Valuation and Financial Analysis
20 Of this is from the spreadsheet
10 Investment risks
5 Ethics & Culture
5 Clean & useful appendices
100 Total

All of the above assumes a report which is neat and professional looking, using the correct template & formats. Otherwise, you can lose up to 20% for a sloppy report.

Except for the preliminary submissions, all sections and sub-sections will be graded on a 5 point Likert scale; then averaged and scaled for final grade for the report.

0 not done
1 Poor
2 Fair
3 Good
4 Very Good
5 Exceptional

NB: There is no such thing as a 100% report, so don’t ask why you didn’t get “full marks”. “Good” means just that – everything done adequately and correctly, and at semester’s end that will be scaled to mean approximately B+ to A-.

Similarly, there is no such thing as a correct answer. If I surveyed 10 professional analysts for their forecast price on your stock, none of them would be the same as yours, they would all be different from each other, and they would all be wrong if I looked at their forecasts a year from now. What matters to us is that you do a good job of researching your stock, understanding that firm, and backing up your views with evidence in your research and calculations. We might disagree with your outlook (just as those 10 analysts might), but we will not grade you down just because of that.

As with the preliminary submissions, reports will be submitted to turn-it-in.