Stock Pitch Competition
Info Session
Agenda
 Overview





Why Participate?

Why Target Corporation?

Competition Guidelines
Sample Presentation Deck
Logistics
Q&A
Tutorial: Capital IQ & FactSet
Overview
Sample
Deck
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Cap IQ &
FactSet
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OVERVIEW
 First Annual Stock Pitch Competition
 Work in Teams of 2–4
 Analyze the stock of Target Corporation
(NYSE: TGT)
 Preliminary Round: Submit Investment
Summary and PowerPoint Deck
 Final Round: 5 Teams will present their pitch
to a panel of Judge
 Networking with industry professional and
UTSC faculty
Overview
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WHY PARTICIPATE
 Test your classroom knowledge in a real life
application as an Equity Research Analyst
 Gain insight into one of the most well-know names in
the retail sector
 Put your analytical and presentation skills into
practice
 Take advantage of UTSC’s state-of-the-art Finance Lab
and learn how to use Capital IQ and FactSet
 Earn a cash prize of $400 as a winning team
 Network with industry professional and UTSC faculty
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INTRODUCING:
VICTOR KUNTZEVITSKY
Victor joined Northland Wealth in August 2012 as an
Associate. Northland Wealth Management is a multi-family
office providing estate and financial services to 50 families,
totaling ~$250M of AUM. His primary role is to support
Portfolio Managers with trading and research functions.
While at McMaster, Victor was the lead supervisor at the
Allen H. Gould Trading Floor and Senior Trader with the
McMaster Investment Club. His passion for philanthropy is
highlighted as the Founder of ‘Get Swabbed’, an annual
bone-marrow drive held in Canadian Universities in
partnership with Canadian Blood Services (CBS).
Victor is Level II CFA candidate and Level II CAIA candidate.
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WHY TARGET CORPORATION




One of the top 10 largest retailers in North America
Recently entered Canadian market
Impacts the livelihood of Canadians and our economy
Recent stock performance
Overview
Overview
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Sample
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Logistics
Logistics
Cap
IQ &in it
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Q
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forFactSet
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A
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COMPETITION GUIDELINES
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CFA Institute Research Challenge
University of Toronto - Scarborough
Market Leader - Sustainable Growth - Attractive Valuation
TSE: DOL
Introduction
& Overview
`
Market Profile (as of February 8, 2013)
Current Price (CAD)
52-week Price Range (CAD)
Market Cap (CAD)
58.80
41.50 - 66.30
4.35 B
Shares Outstanding
73.35 M
Average Volume
354,806
P/E (TTM)
21.45
EPS (TTM)
2.81
Dividend / Yield (%)
0.11 / 0.75
Oct-12
Jul-12
Apr-12
Jan-12
Oct-11
Jul-11
$58.80
Apr-11
Jan-11
Oct-10
Jul-10
Apr-10
Jan-10
Oct-09
Introduction
& Overview
`
BUY
19% UPSIDE
$70
$60
$50
$40
$30
$20
$10
Introduction
& Overview
`
#1 Dollar Store in Canada with over 700 stores nationwide
Introduction
& Overview
`
Seasonal
14%
Consumable
37%
General
Merchandise
49%
Introduction
& Overview
`
Thousands of products – 7 fixed price points.
Sales Distribution
Percent of Sales from Items Priced > $1.00
70%
Introduce
$2.50 & 3.00
price points
49%
50%
51%
Q1 - 13
42%
48%
Q4 - 12
39%
Q3 - 11
40%
40%
Q2 - 11
50%
Q3 - 12
56%
Q2 - 12
Introduce
$1.25, $1.50,
& $2.00
60%
44%
34%
30%
24%
27%
30%
20%
12%
10%
0%
Q2 - 13
Q1 - 12
Q4 - 11
Q1 - 11
Q4 - 10
Q3 - 10
Q2 - 10
Q1 - 10
FY - 09
0%
Introduction
& Overview
`
Global Supplier
Network
Strong Bargaining
Power
Price Leadership
50%
40%
45%
40%
30%
20%
10%
10%
5%
0%
China
North
America
Europe
Other
Introduction
& Overview
`
DOL Sales vs. GDP Growth
Competition
18%
16%
14%
12%
10%
8%
6%
4%
2%
-2%
-4%
2007
Retail
Industry
2008
2009
DOL Sales Growth
MacroEconomic
2010
2011
GDP Gowth
Correlation = -0.57
Introduction
& Overview
`
MacroEconomic
Competition
Retail
Industry
Value ($) Bln
Operating Revenues – Chain vs. NonChain Stores
$500
$450
$400
$350
$300
$250
$200
$150
$100
$50
$0
Operating Revenues Total
Operating Revenues (Non Chain Stores)
Operating Revenues (Chain Stores)
Introduction
& Overview
`
Bargaining
Power of
Suppliers
4
3
Retail
Industry
Threat of
Substitute
products
Competitive
Rivalry
within
Industry
MacroEconomic
Competition
2
1
0
Bargaining
Power of
Customers
Threat of
New Entrants
Why DOL?
`
Market
Leader
No. of Stores
800
735
700
600
500
400
300
200
124
117
105
100
66
51
0
Dollarama
Dollar Store
with More
Dollar Tree
Canada
Great
Canadian
Everything for Buck or Two
a Dollar
Why DOL?
`
Sustainable
Growth
DOL Revenue Growth - $MM
$2,792
12% CAGR
$2,528
$2,282
$2,053
FY17 F
FY16 F
FY15 F
FY14 F
FY13 F
FY12
$1,420
FY11
FY08
$1,089
$1,254
FY10
$972
FY09
$888
FY07
$1,821
$1,603
Why DOL?
`
Growth
Attractive
Valuation
Operational
Efficiency
Target Price
80% FCFF
20% P/E
$68.92
$72.18
$55.89
Financials &
Valuation
`
Contraction
Store
Expansion
Same Store
Sales
-30%
-15%
+10%
+10%
Stable
Expansion
Financials &
Valuation
`
FCFF
WACC:
8.41%
11.7%
CAGR
COMPS
Cash Flows
Sales
 Store Expansion
 Increasing SSS
Net Profit
Margin
 Growing Margins
 Economies of Scale
11.9%
Financials &
Valuation
`
FCFF
Comps
Average
Market Cap (B $USD)
7.26
Valuation Ratios
P/E Ratio
18.55
EPS Growth
18%
PEG Ratio
1.21
P/B Ratio
4.77
P/S Ratio
1.24
EV/EBITDA
9.88
COMPS
DOL TSX
4.38
FDO NYSE
7.60
DLTR NASDAQ
8.78
DG NYSE
14.41
NWC - TSX
1.12
21.45
32%
0.79
4.70
2.46
13.51
18.40
14%
1.31
5.54
0.83
8.84
15.52
17%
0.92
7.28
1.26
8.55
15.97
17%
0.94
3.04
0.92
8.94
17.77
9%
2.07
3.31
0.73
9.56
Financials &
Valuation
`
Income Statement
Profit Margin vs. Sales Growth
16%
14%
12%
10%
8%
6%
4%
2%
0%
Net Profit Margin
Sales Growth
Financials &
Valuation
`
SG&A/Sales and Net Profit Margin
22%
16%
21%
14%
21%
12%
20%
10%
20%
8%
19%
6%
19%
4%
18%
2%
18%
0%
17%
-2%
SG&A/Sales (%)
Net Profit Margin (%)
Financials &
Valuation
`
Balance Sheet
Profitability Ratios
25%
22.58%
22.21%
20%
15%
12.76%
10.15%
10%
5%
0%
ROA
FY2011
ROE
Industry Avg 2011
Financials &
Valuation
`
Turnover Ratios
FY 2008
FY 2009
FY 2010
FY 2011
Industry Avg 2011
Total Asset Turnover
0.8x
0.9x
1.1x
1.2x
2.23x
Inventory Turnover
2.9x
3x
3.3x
3.2x
6.09x
Capital Structure - Debt/Equity
1,600,000
140%
1,400,000
120%
1,200,000
100%
1,000,000
80%
800,000
60%
600,000
40%
400,000
20%
200,000
0
0%
Debt
Equity
Debt/Equity
Investment
Risks
`
Impact
•
•
•
•
•
•
•
•
 Strategy
Growth
Natural Disasters
Earnings Manipulation
•

Distribution
Network
IT Systems
Regulatory Environment

Inventory Shrinkage
Foreign Exchange
•
•
•
Product
Safety/• Litigation
Product
Real Estate
Product
Real Estate Selection
Selection
•
Safety/Litigation
Safety/Litigation
Real
Estate Selection
Merchandise
•
Merchandise
Merchandise/
Ops. Cost
Occupancy Cost
•
Replenishment &
Inflation
Risk
Inflation
Risk
Merchandise
Replenishment
Corporate
•
Retail Competition
Governance
•
Share Repurchase
Probability
Jan-14
Oct-13
Jul-13
BUY
Apr-13
Jan-13
Oct-12
Jul-12
Apr-12
Jan-12
Oct-11
Jul-11
$80
Apr-11
Jan-11
Oct-10
Jul-10
Apr-10
Jan-10
Oct-09
Conclusion
`
$68.92
19% UPSIDE
$70
$60
$50
$40
$30
$20
$10
Conclusion
`
Market Leader
Sustainable Growth
Attractive Valuation
Recommendation:
BUY
IMPORTANT DATES
 Oct. 7th / 8th: Info Sessions
 Friday, Oct. 11th: Team Registration
Deadline
 Tuesday, Oct. 15th: Investment
Summary and Presentation Deck Due at
5:00pm
 Friday, Oct. 18th: Top 5 Teams Present
to Judges
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TEAM REGISTRATION
 Teams of 2–4
 Free for Investment Society members, $10 for nonmembers
 Register your Team at the Investment Society booth in
the IC Atrium from 10am–4pm between Tuesday, Oct
8th and Friday, Oct 11th
 Provide a Team Name, Team Captain, list of members
 Teams with non-members will be required to pay in
order to complete the registration
 Registration Deadline: Friday, Oct 11th at 4:00pm
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PRIZES

1st Place: $400 Cash Prize,
Certificate & Reference letter

2nd Place: Certificate &
Reference letter

3rd Place: Certificate &
Reference letter

Networking opportunity for the
top 5 Teams
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10 PRESENTATION TIPS
1. Consistent font type and size
2. Professional and concise language
3. Limit the text and use visuals where appropriate in the deck
4. Proofread your deck for grammar and spelling
5. Practice your presentation and be mindful of the timing requirement
6. Ensure the pitch is presented in a logical, well-structured manner
7. Involve all Team members in the presentation and be aware of transitions
8. Ensure Team members know all components of the pitch
9. Project your voice and be confident in your presentation
10. Be prepared to answer additional questions about your investment pitch
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GOOD LUCK TO ALL
PARTICIPANTS!
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FINANCE LAB TUTORIAL
Introducing: Stephanie Perpick and Norman Xu
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