Friday February
st
21 ,
2014
Lafayette College Investment Club
Meeting Agenda
 1) Market Update
 2) AT&T Pitch (BUY T, SELL VZ)
 3) Financial Statement Overview
 4) Announcements
Market Update
By: Chris Ulyett and Ryan McCormick
Buy American

Many analysts predict “Made in the U.S.A.”

Three Reasons



China’s Economy
U.S energy independence
Skills and innovation
Labor Market

U.S. workers are slowly getting bolder and shedding
caution

Quitting rate reported at 1.8% November 2013

Average quitting rate is 2.1%

Most Recent low in quitting rate 1.2% in September 2009
Suspension of Debt Ceiling

Extends the government's borrowing authority until March
2015

The first time since 2009 Congress has passed a "clean"
debt limit.
Farm Bill
• Added insurance for agriculture sector
• $7 Billion in aid for ranchers and farmers nation wide
• $8 billion cut to food stamps
Changes At Coca Cola
• CFO Gary Fayard will retire
• To be replaced by veteran Kathy Waller
• Waller announced $1bn cut in costs this year in
response to down quarter
Market
• Ends at week high in DOW and S&P 500
• DOW gained 0.6%
• S&P 500 gained 0.6%
• Eurofirst 300 gained 0.01%
• Shanghai dropped 0.18%
• Gold down 0.3% to $1,317
Buy AT&T
Dump Verizon
NYSE: T, VZ
Industry: Telecom Services
Company
Descriptions
 Multinational broadband &
telecommunications
 Operates in wireless, wireline,
broadband television
subscription
 Share an oligopoly with each
other
Performance in Sector
 Combined AT&T and Verizon
dominate the mobile wireless
and broadband market.
 FCC reports that the
companies enjoy 60% of
revenue
So, why sell Verizon (VZ)?
 Overvalued.
P/E (ttm) of 12.03 (but isn’t this
good? Not in this case!)
 Investing too much in wireless
market. Single focused.
 Only owns 55% of its most
lucrative division VZ Wireless
 Get out now, yield benefit.
 VZ (FiOS) is underperforming
to keep up with AT&T (UVerse) wireline
Overview: Why Invest in AT&T?
 AT&T invested in future
growth.
 Dominant in wireline
business (broadband and
video offerings).
 Long-term dividends!
“Our dividend is clearly a sacred
matter for us.” CFO John
Stephens
 Forward thinking
management team: overseas
investments.
The Numbers: Why Invest in AT&T?
 29 consecutive years of increased dividends. Now at
5.6%
 CEO Randall Stephenson has a vision for growth in
European market
 Currently stock is discounted because VZ is perceived to
have stronghold.
 Expected 6.5% earnings growth.
 Trading at lower P/E (ttm) ratio (9.79) and higher yield
than Verizon
Financial Statements
Othman Guennoun
Irvin Cedillo
February 14th, 2014
The 4 Financial Statements
 Income Statement
 Statement of Retained Earnings
 Balance Sheet
 Statement of Cash Flow
 They all flow into one another
Why are they used?
 Important reasons:
 Show performance
 A mean for investors to measure a company
 Helps the managing team make important decisions
The Income Statement
 Basic Formula:
Revenues – Expenses = Net Income or Net Loss
The Statement of Retained
Earnings
 Basic Formula:
Beginning Retained Earnings + /– Net Income –
Dividends Declared = End Retained Earnings
 Net Income from the Income Statement
The Balance Sheet
 Other name: Statement of Financial Position
 Snapshot of a company on a specific day
 Basic Formula:
Assets = Liabilities + Stockholder’s Equity
 Assets: Economic resources to benefit the future of the
company
Current: Cash, Supplies, Inventory
Non Current: Land, Equipment, and Buildings
 Liabilities: The company’s debt
Current: needs to be paid back within a year
Long Term: over a year
 Equity: Retained Earnings, Common Stock, APIC
Statement of Cash Flow
 Operating Activities
 Investing Activities
 Financial Activities
 Shows what the company is doing throughout years.
Expand?
 Net Income in all 4 statements
Ratios
 Current Ratio
 Use ratios to compare companies (competitors)
Important Announcements
 1) Potential Speakers coming ….
 Bennett Goodman
 Charles Chesebrough
2) Fleece Trivia Contest
 Currently designing a trader like fleece to be given to
select students who answer correct questions
3) Board Meetings Will Be held in 12:15 Simon Lobby
 If you would like to be added to chain email please see
me after meeting (board or member)
4) For next week look at BAC we are going to pitch a sell