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Discussion Topic: Exercise your research skills

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 Josh
(@orleron)
Posts: 95
Trusted Member Admin
Topic starter
 

Being able to look at the financial statements of a company and determine some guesses on its health is a good skill to have.

All public companies in the US must publish their financial statements quarterly and yearly. Take a look at the statements for your favorite company. Post here about your impressions on its health, describing some key ratios that support your argument.

Spiral Medical Development
www.spiralmeddev.com

 
Posted : 29/10/2016 6:40 am
(@dag56)
Posts: 79
Trusted Member
 

The company I am choosing to perform a brief valuation on is Bristol-Myers Squibb
.
ROI=20.87% The current return on investment that is given by marketwatch.com shows a healthy ROI percentage. This roughly translates to for every $5 invested in Bristol-Myers Squibb, you can expect a $1 return of profit at its current market rate. It can be calculated by dividing net sales by investments.
ROE=29.28% This is arguably the most important metric to evaluate a company (fun fact: it is also Warren Buffet’s favorite metric) due to its very direct and essential formula used by stakeholders/ investors. This metric compares the income comparing the income available to just equity investors to the capital owned (and put to work) by just equity investors. Regarding the near 30% rate of BMS, the average the average ROE of more than 7,400 US publicly traded firms was 10.38% so it is safe to say that BMS is a more valued company then most.
ROA= 13.62% currently at a respectable rate, the ROA of BMS shows how efficiently a company can profit from its assets, regardless of its size. One way BMS can boost this efficiency number is for it to utilize more of its assets more efficiently with the goal to eventually turn a profit.

Overall, I would conclude that Bristol-Myers Squibb is a generally healthy company (although it has had some recent setbacks with their recent blockbuster drug) and the current numbers project it to be a safe company to become a shareholder. This bio-pharmaceutical giant looks to have a bright future and be on tract for continued steady and sustainable growth.

http://www.marketwatch.com/investing/stock/bmy/profile

 
Posted : 09/10/2017 7:26 am
(@bb254)
Posts: 113
Estimable Member
 

I did some research on Johnson and Johnson, these were my findings:

Gross Profit Margin (Quarterly)= .6909 as of June 30, 2017
GPM is the ratio between how much money you make after you spend a certain amount in sales. The perfect situation is when this is equal to one, the fact that Johnson and Johnson is so close to one means they are in a great position. If the GMP was less than .2 the corporation would be spending way too much versus how much they are earning.

Net Profit Margin (Quarterly)=0.2031 as of June 30,2017
NPM is the percentage of money brought into the corporation as profit. This value has dropped 4% since March which is not a positive outlook because that means that Johnson and Johnson is not bringing as much profit as they were.

Current Ratio (Quarterly)= 1.344 as of June 30,2017
This is very good because it means that Johnson and Johnson has enough assets to pay off their debt. If the current ratio was below one then it would have meant that the corporation did not have enough assets to get out of debt.

Return on Investment (Annual) =.1439 as of January 01,2017
ROI show you how much the corporation has made vs the investments. An ROI less than 0.1 or 0.2 is technically not a good sign because it means the corporation is not making as much profit versus how much was invested in it.
Therefore, I would conclude that Johnson and Johnson from a financial aspect is currently in a healthy financial state. However, the ratio of return on investment needs to increase above 20% .

Reference:
https://ycharts.com/companies/JNJ/gross_profit_margin
https://ycharts.com/companies/JNJ/profit_margin
https://ycharts.com/companies/JNJ/return_on_assets
https://csimarket.com/stocks/JNJ-Annual-Return-on-Investment-ROI.html

 
Posted : 09/10/2017 4:21 pm
(@asimbana)
Posts: 61
Trusted Member
 

I did research on Google the following are my findings:

Net Profit Margin (Q2)= 13.55% as of June 2017
Net profit margin is the percentage of revenue that was brought into the company as profit. Compared to 2016 which was 21.58%, it seems that it is much less. This makes sense since the company recently invested a large sum of their money into marketing and development of their new product line-up that was revealed this week.

Shareholders' Equity= 83.02%

Is the company's net worth based on the overall summation of all shareholders having shares on this company. This means that this company has received a increase in shareholders and it means that the company has a high net worth value.

References:
http://www.marketwatch.com/investing/stock/goog/financials/income/quarter
https://finance.google.com/finance?fstype=ii&q=NASDAQ:GOOG

 
Posted : 10/10/2017 6:53 am
(@srg36)
Posts: 117
Estimable Member
 

I researched Amazon and these were my findings as of June 2017:

Gross Profit Margin: 38.98%
Operating Profit Margin: 2.31%
Net Profit Margin: 1.28%
ROE: 8.28%
ROA: 2.19%
ROI: 4.58 %

The gross profit margin is relatively high, and has improved compared to the last several years. However, the operating profit margin and net profit margin are relatively low, especially compared to the companies that were mentioned above, indicating that Amazon is spending almost all the money they make. This isn't necessarily bad if the company is investing in new technology that will generate high revenue in the future. The ROI is not very high either, and has decreased from last year also.

https://www.stock-analysis-on.net/NASDAQ/Company/Amazoncom-Inc/Ratios/Profitability/Quarterly-Data#Ratios-Summary
https://csimarket.com/stocks/AMZN-Return-on-Investment-ROI.html

 
Posted : 10/10/2017 9:23 am
(@reshamn)
Posts: 67
Trusted Member
 

Apple financial findings as of July 2017(Quarterly) are as follows:

Gross Profit Margin: 38.51%
Net Profit Margin: 19.20%
Net Income: 46.65B
ROE: 35.68%
ROI: 18.39%
ROA: 14%

The gross profit margin is quite high and has been improving with every quarter. This is reflected in Net Profit margin since Apple sales have been increasing rapidly every year considering the new iPhone upgrade plan.

 
Posted : 10/10/2017 10:37 am
(@savery115)
Posts: 82
Trusted Member
 

What if your favorite company pertains to a cryptocurrency? Can I discuss my evaluation on that?

 
Posted : 10/10/2017 11:39 am
(@thuytienlecao)
Posts: 72
Trusted Member
 

I did some research on Regeneron, these were my findings:

Gross Profit Margin: 91.68%
Net Profit Margin: 18.43%
ROE: 22.10%
Current Ratio:3.75
ROC: 35.21%
Gross profit margin is a very high number. It almost gets to 1. It means that the company is doing great and efficient, making a lot of profit on what it has spent. Current ratio indicates the company may not be efficiently using its current assets or its short-term financing facilities. This may also indicate problems in working capital management.The net profit margin is in a decent area. Overall, the company is in a good financial strength with good growth and profitability.

References:
http://www.marketwatch.com/investing/stock/regn/financials
https://www.gurufocus.com/term/ROIC/NAS:REGN/Return%2Bon%2BInvested%2BCapital/Regeneron+Pharmaceuticals+Inc

 
Posted : 10/10/2017 1:19 pm
(@merzkrashed)
Posts: 123
Estimable Member
 

I did research on Stryker, I found:
SYK Gross Profit Margin (Quarterly) Range, Past 5 Years:
Minimum 64.47%
Maximum 68.29%
Average 66.37%
Net Profit Margin (Quarterly):12.98%
Return on Equity (ROE):17.81%
Return on invested capital (ROIC): 12.93%
Return On Investment (ROI): 4.88% (Jun 30 2017)
40.95% (Mar 31 2017)
39.83% (Dec 31 2016)

Stryker sales doesn't go high as I thought!. the GPM-Average in the past 5 years almost the same ratio!. Net Profit Ratio seems to be good.

https://ycharts.com/companies/SYK/gross_profit_margin
https://csimarket.com/stocks/SYK-Return-on-Investment-ROI.html

 
Posted : 12/10/2017 7:49 am
 ec52
(@ec52)
Posts: 72
Trusted Member
 

I did some research on Medtronic, these are my findings:

Gross Profit Margin = indicates the percentage of revenue available to cover operating and other expenditures: 0.6873 (2017), 0.6829 (2016), 0.6886 (2015). For last three years this ration stayed pretty much stable with slight GPM deterioration between 2015 and 2016, but improved in 2017 not reaching 2017 level.

Operating Profit Margin = a profitability ration calculated as operating income divided by revenue: 0.1794 (2017), 0.1835 (2016), 0.1859 (2015). OPM deteriorated from 2015 to 2017 which indicates deficiency controlling costs and expenses associated with business operations. Compared to a margin of 25% which is considered favorable by most analysts the company is not doing so well.

Net Profit Margin = an indicator of profitability, calculated as net income divided by revenue: 0.1356 (2017), 0.1227 (2016), 0.1320 (2015). NPM deteriorated between 2015 and 2016, but then improved from 2016 to 2017 exceeding 2015 level. Meaning that the company is doing a better job this year converting revenue into profits than the last two years.

Return on Equity = A profitability ration calculated as net income divided by shareholders' equity: 0.0801 (2017), 0.0680 (2016), 0.0503 (2015). ROE has increased since 2015, although it is relatively low compared to other companies researched in this forum.

Return on Assets = A profitability ration calculated as net income divided by total assets: 0.0404 (2017), 0.0355 (2016), 0.0251 (2015). ROA has increased since 2015, although it is relatively low compared to other companies researched in this forum.

Reference:
https://www.stock-analysis-on.net/NYSE/Company/Medtronic-PLC/Ratios/Profitability

 
Posted : 12/10/2017 5:16 pm
(@alexandrabuga)
Posts: 149
Estimable Member
 

I did some research on Amgen Inc. Amgen is up 6.84% in sales with 5.8B in revenues with Net Income of $2.2B.
Quarter Financials as of June 2017
Gross Profit margin 81.26% - Amgen is doing well, .81 is close to the ideal 1 so they are efficiently spending
Operating profit margin 46.93% - (Operating income is $2.7B) So operating income is 49% of revenue
Net profit margin 37.2% Amgen's NPM improved from Q4 2016 to Q1 2017 and from Q12017 to Q2 2017
ROE 25.77% Amgen is doing well with over 25% ROE shows how much profit a company generates with the money shareholders have invested. As dag56 pointed out average is about 10% so Amgen is valued high.
ROA 10.27% Amgen's ROA improved from Q4106 TO Q1 2017 and from Q12017 to Q22017
ROI 11.97% which is up from last quarter (11.87%) and remains healthy
Current ratio 6.19 which very good because it means they have enough assets to pay off their debt as bb254 mentions

Overall, Amgen is a very healthy company.
https://www.stock-analysis-on.net/NASDAQ/Company/Amgen-Inc/Ratios/Profitability
http://www.marketwatch.com/investing/stock/amgn/financials/income/quarter

 
Posted : 12/10/2017 6:34 pm
 aaq2
(@aaq2)
Posts: 38
Eminent Member
 

Walmart
Return on Equity:
Return on equity expresses net income as a percentage of shareholders equity. ROE values about 9-10% are considered strong and ROE above 25% is considered excellent. Walmart has an ROE of 17.5
Debt to equity ratio: Total debt/total equity. If the value is high then it means the company is growing by borrowing money. For Walmart, this ratio is .6141. This means the company is growing possibly because of profits and is considered low risk

Inventory turnover ratio: cost of goods sold/average inventory. This measures how long inventory stays on the shelves before being sold. For Walmart the ratio is 8.05 days.

Asset turnover ratio: sales/assets. This is a financial measure of how a company uses its assets in generating sales revenue or income. Higher ratio means there is more efficient asset management. The ratio for Walmart is 2.39 so that's good

 
Posted : 13/10/2017 1:01 pm
(@kak33)
Posts: 58
Trusted Member
 

Abbott Laboratories reported revenues of $6.64 billion in 2Q17, exceeding the analysts’ estimates. Abbott stock gained more than 4% the day of its 2Q17 results release, on July 20, 2017.
In 2Q17, Abbott reported EPS (earnings per share) of $0.62, compared with the analysts’ estimates of 0.61 per share.
According to the Wall Street analysts’ projections, Abbott Laboratories is expected to report a gross profit margin of 59.6% of total sales. In 2Q17, the gross profit margin of the company came in at ~59.8% of total sales.
Wall Street estimates, the company will report 3Q17 revenues of ~$6.71 billion, representing a YoY (year-over-year) growth of ~26.7%. In 3Q17, Abbott expects to register operational sales growth in the mid-single digits.
ABT’s adjusted research and development investment is expected to be ~7.5% of sales in 3Q17. However, its adjusted SG&A (selling, general, and administrative) expenditure is expected to be 29% of total sales, compared with its SG&A expenses of 30.1% of sales reported in 2Q17.
On October 11, 2017, ABT stock’s consensus 12-month target price was $56.3, which amounts to a ~1.6% return potential, based on its closing price of $55.4 on October 10, 2017. ABT is expected to reach the highest 12-month target price of $64, representing maximum upside potential of 15.5%.
The maximum downside risk of investing in ABT stock is expected to be around -15.2%, based on its lowest 12-month target price of $47.

Over all, Abbott is pretty stable and is expected to meet their third quarter estimate of 11% earnings increase and sales increased despite the impact of the weak euro on currency translation.

http://money.cnn.com/2000/10/10/companies/abbott/
http://marketrealist.com/2017/10/inside-abbotts-3q17-revenue-expectations-hit-or-miss/

 
Posted : 14/10/2017 12:40 pm
 hv42
(@hv42)
Posts: 42
Eminent Member
 

I did Research on Colgate Palmolive:-
Net income and Diluted earnings per share in second quarter 2017 were $524 million.Gross profit margin was 60.1% in second quarter 2017. Operating profit decreased to $853 million in second quarter 2017 compared to $944 million in second quarter 2016. Excluding charges resulting from the 2012 Restructuring Program in both periods, Operating profit was $995 million in second quarter 2017, a decrease of 1% versus second quarter 2016. Operating profit margin was 22.3% in second quarter 2017 versus 24.6% in second quarter 2016. Excluding charges resulting from the 2012 Restructuring Program in both periods, Operating profit margin was 26.0% in second quarter 2017, a decrease of 10 basis points versus the year ago quarter.
I don't think currently Colgate is doing that well in the market Net sales declined 0.5% and organic sales were even with the year ago quarter.

 
Posted : 14/10/2017 4:41 pm
(@dh239)
Posts: 39
Eminent Member
 

Using data published by the Wall Street Journal on Tesla Inc. (TSLA) I have found the following metrics to be very interesting.

Earnings per share: -4.68
Gross Margin: +22.48
Operating Margin: -9.86
ROA: -4.39
ROE: -23.11
ROI: -8.7
Revenue: 2.79 B
Revenue Growth: +119.65%

Based on the metrics, one would be alarmed by the negative ROI, ROA, and ROE. The numbers indicate that Tesla is not a healthy company and that it has a return on equity that is far under the healthy/strong range of 9-12%. However, it is also known that Tesla is investing heavily in new technologies and is set to profit in the future from these investments. For this reason, it is not entirely possible to determine the health of the company from the most popular metrics (ROE, ROI).

Even with the unsettling metrics, investors have confidence in Tesla as a car manufacturer and technological pioneer. Tesla has shown growth in sales and revenue compared to past quarters, although growth has slowed tremendously since the company first started. I would determine the health of the company to be good, perhaps closer to fair. This is based largely on the fact that Tesla is currently a newer company with a large number of investments and not a company that has established itself fully to be judged solely on traditional metrics.

 
Posted : 14/10/2017 5:23 pm
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