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Comparative Industry Analysis By: Russell Pellichino Class: FIN 653 Professor: Dr. John Cresson
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Liquidity and Leverage (Gaming) Liquidity: ▫Current Ratio- Pinnacle is most liquid. Due to high level of inventory. ▫Based on Quick & Cash, MGM is most liquid. Leverage: ▫All firms have been increasing leverage through debt. ▫PENN & MGM, well balanced debt & equity. ▫Both have generated high levels of cash coverage. They can easily afford this debt.
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Asset Management and Profitability (Gaming) Asset Efficiency: ▫All firms are increasing asset efficiency. ▫PENN has highest levels in 3 of the last 5 years. ▫MGM is lowest, but are consistently making progress. This is a good sign for the future. Profitability: ▫All firms have inconsistent PM. ▫MGM’s ROE & ROA have increased for 3 years. Likely driven by increased PM & operating margin. ▫PENN has low ROE & ROA. Likely driven by increased in tax & interest expense.
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Market Value and EVA (Gaming) Market Value: ▫PENN, Isle, & Pinnacle have consistent P/E. Investors see growth potential. ▫All but PENN have increased Market-to-Book. They are making returns on investor $. EVA & Competitors: ▫MGM has significantly highest ROIC & EVA. ▫MGM also has highest EPS. They are making $ for shareholders.
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My Choice From Gaming Industry I like what MGM is doing in their industry: ▫Showing progress in asset efficiency. Potential future upside in profitability. ▫Least leveraged, by balanced combination of debt and equity. ▫Taking less risk, making higher returns. Maximizing shareholders wealth.
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Liquidity and Leverage (Merchants) Liquidity: ▫Current Ratio- all firms are very liquid. Fred’s highest current ratio all 5 years. ▫Quick & Cash- DLTR is most liquid. FDO consistently increasing. Leverage: ▫All have balanced combination of debt & equity. FDO is most leveraged. ▫All firms have maintained high cash coverage.
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Asset Management and Profitability (Merchants) Asset Efficiency: ▫All five firms are in a strong position. ▫Big Lots has used assets most efficiently. ▫DG & DLTR are consistently increasing. Good sign for the future. Profitability: ▫DLTR is most profitable; high PM, ROE, & ROA. ▫DG is also increasing in all categories. Likely driven by high operating margins.
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Market Value and EVA (Merchants) Market Value: ▫All five firms are producing high P/E. Future growth potential in eyes of shareholders. ▫DLTR has significantly higher Market-to-Book. They are generating returns on shareholder $. ▫FDO also high & DG is consistently increasing. EVA & Competitors: ▫DG & DLTR, significantly highest EVA. DLTR has higher ROIC by more than double DG. ▫DG has highest EPS. They are making shareholders happy.
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My Choice From Merchants Industry I like what DLTR is doing in their industry: ▫Well balanced combination of debt & equity. ▫Making the highest returns. ▫Consistently improving asset efficiency. ▫Adding significant value. ▫Making the highest returns with less risk. Maximizing shareholder wealth.
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Liquidity and Leverage (Motors) Liquidity: ▫Current, Quick, & Cash- Chevron is most liquid. ▫I like that BP has consistently increased liquidity, despite recent oil spill. Leverage: ▫BP is most highly leveraged, but are consistently reducing this leverage. High cash coverage, they can afford this debt. ▫Chevron is least leveraged, & high cash coverage.
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Asset Management and Profitability (Motors) Asset Efficiency: ▫BP has highest asset turnover; Exxon is close behind. ▫Conoco shows promising increases. ▫Chevron & Total have slowly declined. Profitability: ▫Conoco leads in PM, but Exxon is most profitable. ▫Exxon has highest ROA & ROE nearly all 5 years. Likely driven by asset efficiency, low tax expense, & high operating margin. ▫Conoco, Chevron, & Total also showing high ROE. Likely driven by their high PM & Operating Margin.
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Market Value and EVA (Motors) Market Value: ▫All 5 firms have high P/E & Market-to-Book. Conoco saw most consistent increases in P/E. Exxon Lead Market-to-Book all 5 years. EVA & Competitors: ▫Exxon lead ROIC & EVA, by a significant margin. High performance, above & beyond expectations. ▫BP generated the highest EPS.
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My Choice From Motors Industry I like what Exxon is doing in their industry: ▫Minimal leverage. ▫High cash coverage. ▫Delegating assets & operating very efficiently. ▫Going above & beyond, adding significant value to the company. ▫In high regard with shareholders. ▫Earning high returns for shareholders.
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