Stock Market Success
Understand goal
Generate idea
Avoid gambling mentally
Follow economic indicators
Company Analysis
Management
Service/Products
Financial Health
Stock Price Evaluation
LOOK AT YOUR LIST OF TERMS!!! 
Company Overview
• Multinational, operates in more than 130
countries.
• 88 million customers. 62,000 employees.
• “Together, we’re working to help see,
build, and secure a better future for
everyone.”
Management
Robert H.
Benmosche President and Chief
Executive Officer.
7M Annually
2009
Alfred University
New York
Services and Products
Accident and health.
Annuities.
High Net Worth.
Insurance.
Marine and Inland Marine.
Travel.
Warranty.
Competition
Met Life, Inc. $36.43
Traveling Companies, Inc. $81.46
Manulife Financial Corp. $14.95
Aflac, Inc. $51.01
Financial Health
$64B revenue in 2011.
30% of revenue out of the USA and Canada.
Recently paid off debt with the US
government.
Total of benefits, claims and expenses.
$65,302 (2011) $59,590 (2010)
Financial Health cont.
Year-end balance sheet data:
Total assets 555,773
Total investments 410,438
Total liabilities 441,444
Total AIG shareholders’ equity 104,951
Total equity 105,806
Stock Price Evaluation
Previous close 38.07
Today’s open
38.28
Day’s range
38.21 - 38.90
Stock Price Evaluation
cont.
Earnings growth (last year) -18.48%
Earnings growth (this year) +271.81%
Earnings growth (next 5 years)
P/E ratio 2.5
EPS
$1.64
+10.00%
Methods
Public information – Financial
Stocks, Finances, Market, Investments.
Apple, in the past 6
Months
“you should never invest in any idea that you
cannot illustrate with a crayon.”
“ The only value of stock forecasters is to make
fortune tellers look good. “
--Warren Buffett
Apple: product, service
More innovative
Sleek design
Novel software
Good quality
Product integration
Perfect service
Apple: Management
Analyses for Apple
Fundamental analysis—used for test if you pick
the right stock
Technical analysis—appropriate the right time
and price to buy it
Analysis for apple
Fundamental analysis
Profitability ratios
ROA may not used for personal computer industry
Valuation Rank
Compares earning, cash flows and sales to market
value (intrinsic value & market value)
Apple vs. Google
Apple vs. Industry leader
Technical analysis
Technical analysis
Extremely complicated
MACD, KDJ, BOLL, etc
Affected by psychology of shareholders
Data only, no industry background needed
MACD
Background
What is Home Depot?
Current chairman and CEO
HD Supply
Competitors
Major shareholders
Recent Activity
Key Statistics
Fiscal year ends: Feb. 2nd
Total market capitalization for all publically traded
companies: $15,640,707,100,000
Total market capitalization for Home Depot, Inc.:
$103.80B
Price/Earnings Ratio: 23.39
Number of shares of common stock outstanding:
$1,523,263,533
Industry
Sector: Services
Industry: Home Improvement Stores- 11 Stocks
Home Depot vs. the industry leader (KGF.L)
1.
2.
3.
Market Cap comparison
Price per share
Price/Earnings Ratio
Industry Continued
Financial Health
Total Revenue- $70,395,000
Total Liabilities- $22,620,000
Cost of Revenue- $46,133,000
Total Stockholder Equity$17,898,000
= Gross Profit= $24,262,000
Total Current Assets$14,520,000
Total Assets- $40,518,000
Total Current Liabilities$9,376,000
Total Operating Expense$18,755,000
Total Debt- $10,788,000
Total Cash Flow- $6,651,000
Determining Financial
Health
Total Cash Flow- $6,651,000
Cash Flow Growth Rate- 10.28%
Earnings Growth Rate- 13.40%
Debt-to-equity ratio- 0.6073(2012)0.6027(2011)0.5161(2010)
Return on equity- 25.42%
Gross Profit Margin34.37%(2012)34.27%(2011)33.87%(2010)
Smith and Wesson
History of the Company:
Horace Smith and Daniel B. Wesson
First partnership in 1852
Second in 1856
Introduced the Model 10
Revenue-Pass
Earnings Per Share-Pass
Return on Equity (ROE)Fail
Analyst
Recommendations-Pass
Positive Earnings
Surprises-Pass
Earnings Forecast-Fail
Earnings Growth-Pass
PEG Ratio-Pass
Industry Price-Earnings
Days to Cover-Fail
Insider Trading-Pass
Weighted Alpha
Strength of Company
Stock
Pass: 8
Fail: 4
8:4
Moderate