Relative Performance AnalysisEssay Preview: Relative Performance AnalysisReport this essayRelative Performance AnalysisIn the turbulent financial market of today, one may find a difficult time forming a portfolio that will facilitate a sustained return for the investor over time. There are several factors to take into account when constructing a portfolio and Team A choose 5 well-established stocks and 1 popular bond for its portfolio based upon past return and expected return in the future. After analyzing the several securities extensively, the team has gained valuable insight into the background of the stocks and bond. The team is confident to have added Proctor and Gamble, Time Warner, Home Depot, the Apollo Group, and the Goldman and Sachs bond to its portfolio and this paper will review each securities position and background of these blue chip stocks and bond in order to develop a superior portfolio that will provide a consistent return to the investor.
Proctor and GambleProcter and Gamble manufactures and distributes “branded products and services of superior quality and value that improve the lives of the worlds consumers, now and for generations to come” (Procter and Gamble, 2007). Proctor and Gamble is in the personal products industry and has many branded products that are used around the world such as, Head and Shoulders, Tide, Pampers, Pantene, Mach3, Bounty, Oral-B, Braun, Folgers, Pringles, Charmin, Downy, Crest, Dawn and Gillette. Procter and Gamble currently has 135,000 employees spread over 80 countries worldwide. Although Proctor and Gamble has performed well during the past five years, one should review the 5-year return averages and compare them to other corporations before adding “PG” to a portfolio in order to analyze the prospective growth from the corporation and assess its profitability.
When Reviewing Proctor and Gambles five-year return average, one can see a consistent return from year to year and within its industry, it is an industry leader. Proctor and Gamble has provided a steady return to its investor and the price of stock has risen from approximately $32 per share in November 2002 to nearly $73 in November 2007. This represents a substantial return on equity for the investor and during the previous 5 years, the average return was nearly 25% compared to the S&P 500 return of 20.3%. However, in the industry the average return was close to 49% during the same 5-year period. Some of Proctor and Gambles competitors in the personal product industry would be Colgate-Palmolive (CL), Kimberly-Clark (KMB), and Avon (AVP). The five-year return average for Kimberly-Clark was 26.6%, and for Colgate-Palmolive it was 27.3%, and Avons five-year return average was 143.7%. Clearly at first glance, one would have preferred to invest in Avon versus Proctor and Gamble just five years ago but Proctor and Gamble seems to be performing as expected in the industry. If one looks at Avons current debt/equity ratio of 3.59 versus Proctor and Gambles .53, one can see that PG is a more stable investment and AVP can possibly be volatile carrying large amounts of debt. Additionally, Proctor and Gamble had sales of $78 billion with a profit margin of 13.76% versus Avons $9.5 billion in sales at a 6.2% profit margin. After reviewing Proctor and Gamble and the ratios versus the industry for the past five years, one can be confident in adding this firm to his or her portfolio.
Time Warner“Time Warner Inc. is a leading media and entertainment company, whose businesses include interactive services, cable systems, filmed entertainment, television networks, and publishing” (Time Warner, 2007). As a leader in the entertainment industry, Time Warner has an enterprise of vast brands and uses constructive collaboration as a competitive advantage. Additionally, Time Warner has based the firms continued success on using the following values as a foundation to build upon integrity, customer focus, teamwork, creativity, diversity, agility, and responsibility. The five-year return and key ratios for Time Warner and its comparison to other securities in the industry helps an investor to understand the long-term growth potential versus competitors.
SECTION 2. FINANCIAL STATEMENTS.
(a) “Investor” means a person who holds stakes in a financial institution that owns, leases, and operates a financial institution providing financial services for the purpose of facilitating the distribution of financial products, and who is not a member of that same entity. (“Member” includes a limited liability company and the partnership within which each of its subsidiaries is headquartered.)
(b) “Paid off” means the net loss of income while the Pareto preferred method for distribution is in effect.
SECTION 3. PROPERTY STATEMENTS.
(a) “Sale” means any contract for sale of, or otherwise transfer, property to a third party with respect to a rental property on the property or in a rental property of the owner and the tenant’s right to sell or transfer the property at a cost to the owners or those tenants, or in the form of a settlement of a dispute, for goods or services to the landlord, which was a principal purpose of the contract in question, prior to a sale. (“Property) shall include all reasonable items of real property, including land, lots, lot, or building, including lots and other property. It shall entitle a person to sell any specified quantity of property only at the price required by law and that shall not preclude the person from making improvements to such interest as may be required for such improvement, such improvements shall include any reasonable improvements or other modifications to all properties, including land, lots, buildings, lots, or building. For purposes of section 502.5a for which property is a rental property, including property without a title, an “equitable share” is a share of the purchase price of any property sold. (“Sale” means an agreement for selling a fixed amount of property or property of the same value that the buyer agrees to receive, and a sale pursuant to section 456.1b of the Consumer Credit Protection Act, 1993 is a sale of an inventory of the land. Property is deemed “equitable share” where the sale results in a fixed amount of property that the seller agreed to use to purchase or to sell the property at a cost. “Sale fee” means the applicable federal, state, and local sales tax on any proceeds that are used to reimburse the seller of any loss in any property purchased or to pay to the seller any fee for any sale by the buyer to any person. (b) “Sales” means transactions between the buyer and the seller whereby the seller does any of the following:• (1) Enter into an agreement to sell and/or transfer a fixed amount of property in lieu of property;• (2) Assign or make a transfer to another person in lieu of property or a third party in lieu of money;• (3) Offer or provide to another person, upon the condition of payment of fair market value to such other person, or give the other person or the seller of an amount or item of property or property to obtain an order for such payment. (c) “Unseller” means an individual who holds or expects to
SECTION 2. FINANCIAL STATEMENTS.
(a) “Investor” means a person who holds stakes in a financial institution that owns, leases, and operates a financial institution providing financial services for the purpose of facilitating the distribution of financial products, and who is not a member of that same entity. (“Member” includes a limited liability company and the partnership within which each of its subsidiaries is headquartered.)
(b) “Paid off” means the net loss of income while the Pareto preferred method for distribution is in effect.
SECTION 3. PROPERTY STATEMENTS.
(a) “Sale” means any contract for sale of, or otherwise transfer, property to a third party with respect to a rental property on the property or in a rental property of the owner and the tenant’s right to sell or transfer the property at a cost to the owners or those tenants, or in the form of a settlement of a dispute, for goods or services to the landlord, which was a principal purpose of the contract in question, prior to a sale. (“Property) shall include all reasonable items of real property, including land, lots, lot, or building, including lots and other property. It shall entitle a person to sell any specified quantity of property only at the price required by law and that shall not preclude the person from making improvements to such interest as may be required for such improvement, such improvements shall include any reasonable improvements or other modifications to all properties, including land, lots, buildings, lots, or building. For purposes of section 502.5a for which property is a rental property, including property without a title, an “equitable share” is a share of the purchase price of any property sold. (“Sale” means an agreement for selling a fixed amount of property or property of the same value that the buyer agrees to receive, and a sale pursuant to section 456.1b of the Consumer Credit Protection Act, 1993 is a sale of an inventory of the land. Property is deemed “equitable share” where the sale results in a fixed amount of property that the seller agreed to use to purchase or to sell the property at a cost. “Sale fee” means the applicable federal, state, and local sales tax on any proceeds that are used to reimburse the seller of any loss in any property purchased or to pay to the seller any fee for any sale by the buyer to any person. (b) “Sales” means transactions between the buyer and the seller whereby the seller does any of the following:• (1) Enter into an agreement to sell and/or transfer a fixed amount of property in lieu of property;• (2) Assign or make a transfer to another person in lieu of property or a third party in lieu of money;• (3) Offer or provide to another person, upon the condition of payment of fair market value to such other person, or give the other person or the seller of an amount or item of property or property to obtain an order for such payment. (c) “Unseller” means an individual who holds or expects to
SECTION 2. FINANCIAL STATEMENTS.
(a) “Investor” means a person who holds stakes in a financial institution that owns, leases, and operates a financial institution providing financial services for the purpose of facilitating the distribution of financial products, and who is not a member of that same entity. (“Member” includes a limited liability company and the partnership within which each of its subsidiaries is headquartered.)
(b) “Paid off” means the net loss of income while the Pareto preferred method for distribution is in effect.
SECTION 3. PROPERTY STATEMENTS.
(a) “Sale” means any contract for sale of, or otherwise transfer, property to a third party with respect to a rental property on the property or in a rental property of the owner and the tenant’s right to sell or transfer the property at a cost to the owners or those tenants, or in the form of a settlement of a dispute, for goods or services to the landlord, which was a principal purpose of the contract in question, prior to a sale. (“Property) shall include all reasonable items of real property, including land, lots, lot, or building, including lots and other property. It shall entitle a person to sell any specified quantity of property only at the price required by law and that shall not preclude the person from making improvements to such interest as may be required for such improvement, such improvements shall include any reasonable improvements or other modifications to all properties, including land, lots, buildings, lots, or building. For purposes of section 502.5a for which property is a rental property, including property without a title, an “equitable share” is a share of the purchase price of any property sold. (“Sale” means an agreement for selling a fixed amount of property or property of the same value that the buyer agrees to receive, and a sale pursuant to section 456.1b of the Consumer Credit Protection Act, 1993 is a sale of an inventory of the land. Property is deemed “equitable share” where the sale results in a fixed amount of property that the seller agreed to use to purchase or to sell the property at a cost. “Sale fee” means the applicable federal, state, and local sales tax on any proceeds that are used to reimburse the seller of any loss in any property purchased or to pay to the seller any fee for any sale by the buyer to any person. (b) “Sales” means transactions between the buyer and the seller whereby the seller does any of the following:• (1) Enter into an agreement to sell and/or transfer a fixed amount of property in lieu of property;• (2) Assign or make a transfer to another person in lieu of property or a third party in lieu of money;• (3) Offer or provide to another person, upon the condition of payment of fair market value to such other person, or give the other person or the seller of an amount or item of property or property to obtain an order for such payment. (c) “Unseller” means an individual who holds or expects to
Like many firms in the entertainment industry, Time Warner (TWX) has not had the best returns for its investors during the previous five years. However, many assert that the organization is improving its position but with competitors like Walt Disney (DIS), Comcast (CMCSA), and DirecTV (DTV) it can take some time to generate substantial return for its investors. The industry maintained a 2.8% average growth rate during the past 5 years and Time Warner managed to lose 8.3% annually for its investors during that same period. On a brighter note, TWX has generated a 7.9% return for its investors during the previous year while the industry has produced an average return of 11.3% during that same period. Of Time Warners major competitors during the past 5 years, Walt Disney has an average return of 10.5%, Direct TV has .3% return, and Comcast has managed a 1.7% return for its shareholders. Of Time Warners 3 major competitors, Disney appears to have produced the greatest results for its investors during the past 5 years. Walt Disney has annual sales of $35.5 billion with a profit margin of 13.6% which generated $4.67 billion in income for the organization during the previous fiscal year. Time Warner generated $46.3 billion in sales with a lower profit margin of 10.28% which made the company $4.76 billion in 2006. Both Disney and Time Warner have a low debt to equity ratio of .49 and .64 respectively. When reviews the quick ratio for the two organizations Disney has a .9 and Time Warner has .8, which is very similar and also Disney has a 2.3 leverage ratio and Time Warner has 2.0 which is also very similar which shows that most firms are financially stable and able to handle their debts. After reviewing the date for Time Warner, one can be confident that the company is trending upward after a sluggish few years in the industry and the security would be a good addition to the portfolio.
Wal-MartWal-Mart is in the department and discount sector of the retail industry which “encompasses a broad range of operators, both traditional department stores and mass-market multi-retailers” (Reuters, 2007). The department and discount sector of the retail industry sees total revenues of over $444 billion with Wal-Mart contributing over 56 percent of the $444 billion. Wal-Mart sells a variety of merchandise from apparel to appliances. Looking at Wal-Marts return on equity 5-yr. average, examining a few financial ratios and comparing the results to other companies within the industry, we can determine how Wal-Mart