friday february 21 st , 2014
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Friday February 21st, 2014
Lafayette College Investment Club
Meeting Agenda1) Market Update
2) AT&T Pitch (BUY T, SELL VZ)
3) Financial Statement Overview
4) Announcements
Market Update
By: Chris Ulyett and Ryan McCormick
Buy American
Many analysts predict “Made in the U.S.A.”
Three Reasons China’s Economy U.S energy independence Skills and innovation
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
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.
Farm Bill• Added insurance for agriculture sector
• $7 Billion in aid for ranchers and farmers nation wide
• $8 billion cut to food stamps
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
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
Buy AT&TDump Verizon
NYSE: T, VZ
Industry: Telecom Services
Company Descriptions
Multinational broadband & telecommunications
Operates in wireless, wireline, broadband television subscription
Share an oligopoly with each other
Performance in Sector
Combined AT&T and Verizon dominate the mobile wireless and broadband market.
FCC reports that the companies enjoy 60% of revenue
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
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.
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
Financial StatementsOthman Guennoun
Irvin Cedillo
February 14th, 2014
The 4 Financial Statements
Income Statement
Statement of Retained Earnings
Balance Sheet
Statement of Cash Flow
They all flow into one another
Why are they used?Important reasons:
Show performance A mean for investors to measure a companyHelps the managing team make important
decisions
The Income Statement
Basic Formula:
Revenues – Expenses = Net Income or Net Loss
The Statement of Retained Earnings
Basic Formula:
Beginning Retained Earnings + /– Net Income – Dividends Declared = End Retained Earnings
Net Income from the Income Statement
The Balance SheetOther name: Statement of Financial Position
Snapshot of a company on a specific day
Basic Formula:
Assets = Liabilities + Stockholder’s Equity
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
Statement of Cash FlowOperating Activities
Investing Activities
Financial Activities
Shows what the company is doing throughout years.
Expand?
Net Income in all 4 statements
RatiosCurrent Ratio
Use ratios to compare companies (competitors)
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
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