Friday February 21 st, 2014 Lafayette College Investment Club.
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Transcript of Friday February 21 st, 2014 Lafayette College Investment Club.
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Friday February 21st, 2014
Lafayette College Investment Club
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Meeting Agenda1) Market Update
2) AT&T Pitch (BUY T, SELL VZ)
3) Financial Statement Overview
4) Announcements
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Market Update
By: Chris Ulyett and Ryan McCormick
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Buy American
Many analysts predict “Made in the U.S.A.”
Three Reasons China’s Economy U.S energy independence Skills and innovation
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Labor Market
U.S. workers are slowly getting bolder and shedding caution
Quitting rate reported at 1.8% November 2013
Average quitting rate is 2.1%
Most Recent low in quitting rate 1.2% in September 2009
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Suspension of Debt Ceiling
Extends the government's borrowing authority until March 2015
The first time since 2009 Congress has passed a "clean" debt limit.
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Farm Bill• Added insurance for agriculture sector
• $7 Billion in aid for ranchers and farmers nation wide
• $8 billion cut to food stamps
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Changes At Coca Cola• CFO Gary Fayard will retire
• To be replaced by veteran Kathy Waller
• Waller announced $1bn cut in costs this year in response to down quarter
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Market• Ends at week high in DOW and S&P 500
• DOW gained 0.6%
• S&P 500 gained 0.6%
• Eurofirst 300 gained 0.01%
• Shanghai dropped 0.18%
• Gold down 0.3% to $1,317
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Buy AT&TDump Verizon
NYSE: T, VZ
Industry: Telecom Services
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Company Descriptions
Multinational broadband & telecommunications
Operates in wireless, wireline, broadband television subscription
Share an oligopoly with each other
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Performance in Sector
Combined AT&T and Verizon dominate the mobile wireless and broadband market.
FCC reports that the companies enjoy 60% of revenue
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So, why sell Verizon (VZ)? Overvalued.
P/E (ttm) of 12.03 (but isn’t this good? Not in this case!)
Investing too much in wireless market. Single focused.
Only owns 55% of its most lucrative division VZ Wireless
Get out now, yield benefit.
VZ (FiOS) is underperforming to keep up with AT&T (U-Verse) wireline
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Overview: Why Invest in AT&T?
AT&T invested in future growth.
Long-term dividends!
“Our dividend is clearly a sacred matter for us.” CFO John Stephens
Dominant in wireline business (broadband and video offerings).
Forward thinking management team: overseas investments.
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The Numbers: Why Invest in AT&T?
29 consecutive years of increased dividends. Now at 5.6%
CEO Randall Stephenson has a vision for growth in European market
Currently stock is discounted because VZ is perceived to have stronghold.
Expected 6.5% earnings growth.
Trading at lower P/E (ttm) ratio (9.79) and higher yield than Verizon
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Financial StatementsOthman Guennoun
Irvin Cedillo
February 14th, 2014
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The 4 Financial Statements
Income Statement
Statement of Retained Earnings
Balance Sheet
Statement of Cash Flow
They all flow into one another
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Why are they used?Important reasons:
Show performance A mean for investors to measure a companyHelps the managing team make important
decisions
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The Income Statement
Basic Formula:
Revenues – Expenses = Net Income or Net Loss
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The Statement of Retained Earnings
Basic Formula:
Beginning Retained Earnings + /– Net Income – Dividends Declared = End Retained Earnings
Net Income from the Income Statement
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The Balance SheetOther name: Statement of Financial Position
Snapshot of a company on a specific day
Basic Formula:
Assets = Liabilities + Stockholder’s Equity
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Assets: Economic resources to benefit the future of the company
Current: Cash, Supplies, Inventory
Non Current: Land, Equipment, and Buildings
Liabilities: The company’s debt
Current: needs to be paid back within a year
Long Term: over a year
Equity: Retained Earnings, Common Stock, APIC
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Statement of Cash FlowOperating Activities
Investing Activities
Financial Activities
Shows what the company is doing throughout years.
Expand?
Net Income in all 4 statements
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RatiosCurrent Ratio
Use ratios to compare companies (competitors)
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Important Announcements1) Potential Speakers coming ….
Bennett GoodmanCharles Chesebrough
2) Fleece Trivia ContestCurrently designing a trader like fleece to be given
to select students who answer correct questions
3) Board Meetings Will Be held in 12:15 Simon Lobby If you would like to be added to chain email please
see me after meeting (board or member)
4) For next week look at BAC we are going to pitch a sell