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European Equity Valuation & Analysis
Bloomberg is a global, multimedia-based distributor of information services, combining news, data and analysis for global financial markets and businesses. Bloomberg provides real-time pricing, data, history, analytics and electronic communications 24 hours a day, 365 days a year and is used by over 200,000 financial professionals in 90 countries world-wide. The company has established a unique position within the financial services industry by providing a broad range of features, combining information and analysis, in a single package. The Bloomberg is the definitive source of indicative data for all securities, statistics, indices and research covering all key global securities markets including Equities, Money Markets, Currencies, Corporates, Governments and Derivatives. Bloomberg users also have the ability to consider alternatives and evaluate complex scenarios through the services unique analytical capabilities. In todays session, we will focus on several methods of assigning a value to common stocks using both Bloomberg data and analytical tools. We will look at ways to gather valuation ideas and ways to monitor price movements on groups of companies. Essentially, we will focus on two general methods of stock valuation: Balance Sheet Valuation and Dividend Discount Valuation. In order to do this type of valuation, we need to work with solid, accurate, and comparable data. We need tools to identify companies, to identify the competition, to calculate the ratios for the companies, and to compare companies within their industry groups and with a precise group of companies that you select. Lastly, we will focus on several Dividend Discount Models using the PC or open Bloomberg. We will produce a range of values for a stock and compare that range to the actual traded price. In order to do this, once again it comes back to data as well as fast access to risk free rates, beta calculations, market returns, stock prices, dividends, sustainable growth rates, and the like. The model will serve as a monitor so that you can keep abreast of your companys values against the traded prices.
Bloomberg BasicsEach Bloomberg user (whether you share a terminal or not) is entitled to receive his/her own log-in name and password to customise and store personal functions. The analytics desk or your account rep can assign you a name and password. How to Log In
(1) Press the RED DEFAULT KEY at the top of your keyboard. (2) Type your assigned NAME. If less than 8 letters use the tab key and type in your PASSWORD. **** will appearso no one can read your Password. Press . Accessing Market / Security Information Menu of general analytics which can be performed on a specific market sector. XXX Access a specific function directly, where XXX represents 3-4 letters (or mnemonics) used to identify a specific function (for example, typing WEI will bring you to a screen of World Equity Prices). TK Access a list of all companies, issuers, currencies, commodities, indices beginning with specified letters. Ticker symbols are usually to the right of the name and must be used to identify any security on the system. Ticker Access one security menu of analytics. Once on the one-security menu for a particular security, the analytical functions are available by typing the menu number that corresponds to the function or by entering the Bloomberg mnemonic and . ID (space) Security # Access one security menu (A great way to access a security if you do not know the appropriate market sector). Security ID numbers include: CUSIP, Valoren, SEDOL & ISIN. Ticker Coupon (space) Maturity Access Corporate or Government menu. Ticker XXX Access specific analytics relating to specific security, by-passing menu. To view the two-security function you must define the two securities to be analysed e.g. Ticker Ticker . Always press to return to previous menu of options. Press from any screen to get complete definitions of terminology, formulae and applications of every screen. Press again to return to screen. BH Bloomberg Help. Use to search through Bloombergs databases and get information about company names, brand names (and who owns them), Bloomberg screens, dictionary terms, indices / statistics and people.
For further assistance type and type your question to the 24 hour help desk
Bloomberg NewsBloomberg News is a proprietary, 24 hour news service which provides coverage of all markets world-wide from its 500 journalists and bureaux in major cities around the world. BN combines original stories by renowned reporters that go beyond just the realm of reporting on current news events to provide insight. Combined with computer generated reports, which utilise Bloombergs vast database, the result is a unique, world class news service whose stories regularly appear in over 75 major newspapers around the world.
Bloomberg News is accessed through a system of menus, in addition to the main BN menu (type BN ). Sub Menus include News by Region, Corporate News, Earnings Analysis, Government News, Calendars, Press Summaries, Columns, Special Reports, Surveys, and Corporate Filings. All News stories are archived and stored historically. News stories, research reports and multimedia reports (designated by >) relating to a specific company are stored under the company news section of its single security menu (type CN ).
A great way to familiarise yourself with whats going on in the world is to access our continuously updated listing of the days most important headlines - both financial and world-wide general interest can (type TOP ).
All BN news stories carry the name and telephone number of the journalist filing the report. If you have any questions or want to know more - simply call him or her up and ask. Also listed at the end of each BN story is a list of relevant news categories, tickers and functions that you can investigate to learn more about the topic in question.
It is obvious that prior to going through the process of valuation, we must first have sufficient ideas so that we can go about the process of identifying industries and companies to value in the first place. Lets take a direct approach and look at one way of generating ideas on Bloomberg. The function BBCO provides a handy source for just those sorts of news articles that can help generate investment ideas.
Industry & Sector AnalysisWith Bloomberg you gain significant flexibility in both the way you look at sector data as well as the number of portfolios and indices you can use. To begin, consider the function IBQ that gives you the ability to look at everything provided by Bloomberg relative to any given industry, on one screen. It makes it very easy to follow the news, for example, on that industry. The screen on the left shows the main IBQ screen while the one on the right gives you the information for the airline industry.
Additionally, you can page forward from this point and bring in an automatic spreadsheet that provides you with relevant industry ratios.
Sector AnalysisFirst, lets look at what markets have performed the best around Europe during the past year. Just type WEIS:
Now we need to determine which sectors have performed the best in over the last year. Type GMEN to see a matrix of functions and indices.
The next step is to break down selected indices to see how the various sectors have performed within that index. For example, the BE500 Index can be broken down using the function GRR to produce the result below:
The GRR screens show very high returns in the computer sector over the six months across the European continent. To see how the individual companies within that index have performed over the past year, type the number next to the index on the screen followed by MRR.
Sector Analysis Using the Custom Report Writer: PRPTThe Custom Report Writer, PRPT, can be used to create three dimensional reports that can give you significant information about your index or custom portfolio that you literally cannot get elsewhere. The benefits include bringing the entire Bloomberg database to bear on your particular problem in order to answer specific questions about both the behaviour of indices as well as companies; the function can be used over and over again against other indices and custom portfolios. To see how this works, import an index using the function IPRT. For example: BE500IPRT makes the Bloomberg 500 Index your current portfolio and gives you access to all the client key functions.
Here you can see an overview of client functions. This unites all Bloomberg data, analytics, and news so that you can follow and manage your portfolio as closely as you want. All of these functions apply to both custom portfolio as well as benchmark indices. To see how the Custom Report writer works, type 3 from the above screen then choose to look at the Custom Report Writer by typing the number from the menu to bring up the following list of templates as well as the place to create new reports.
From this screen, it is possible to bring up previously built templates as well as to build a new template. Simply type the number next either new report or next to a previously built template.
Here we have selected number 34 from above, a report called Equity Risk & Return. Notice from the above set-up screen that it has three sections: the summary page, the set-up grouping, and the set-up security level numbers 2, 3, and 4 from the above screen. You can build each one separately by typing the number associated with each section.
Set-up The Summary Page: PRPTYou can select up to 16 fields to build your summary page. These fields are selected from over 3,000 data fields in the data categories as