Financial Management

Financial Management

Investment Analysis

Introduction

The objective of the investors is to earn maximum return from their investment and without valuation of stock prices, this objective cannot accomplish. There are many factors to consider when making investment decisions and one of them is investment environment which is the availability of the buyer and seller for the shares. This paper will focuses on the investment analysis for five listed companies.

Discussion

Five companies from London stock exchange has been choice from different sectors in order to diversify the risk. The companies that has been chosen Tesco Plc, Barclay Plc, Vodafone Group PLC, Unilever PLC and British petroleum Plc. The reasons to select these companies are due to their sustainability in their respect sectors.

Part 1)

Share prices on 1/1/2000

The prices were not available for 1st Jan 2000 due to off day of stock market. Hence, the first day of trading share price has been select which was on 4th of Jan 2000 (shareprices.com/).

Share Price 4/1/2000

Company Name

Date

Open

High

Low

Close

Volume

Tesco (TSCO.L)

4 Jan 2000 (Tue)

181.75

181.75

181.75

181.75

14252697

Barclays PLC (BARC.L)

4 Jan 2000 (Tue)

406.59

406.59

406.59

406.59

66,411,200

Vodafone Group PLC (VOD.L)

4 Jan 2000 (Tue)

294.49

294.49

294.49

294.49

100,716,808

Unilever PLC (ULVR.L)

4 Jan 2000 (Tue)

1,013.33

1,013.33

1,013.33

1,013.33

28,508,696

BP PLC (BP.L)

4 Jan 2000 (Tue)

596

596

596

596

35,025,732

Share prices on 31/12/2009

Shares prices of selected companies on 31st Dec 2009 were as followed:

Share Price 31/12/2009

Company Name

Date

Open

High

Low

Close

Volume

Tesco (TSCO.L)

31 Dec 2009 (Thu)

425.15

428

423.75

423

2,457,173

Barclays PLC (BARC.L)

31 Dec 2009 (Thu)

276.05

276.05

273.41

272.25

8,431,771

Vodafone Group PLC (VOD.L)

31 Dec 2009 (Thu)

144.5

144.5

142.45

143.45

21,813,342

Unilever PLC (ULVR.L)

31 Dec 2009 (Thu)

1,999.00

2,006.00

1,983.00

1,991.00

393,230

BP PLC (BP.L)

31 Dec 2009 (Thu)

605.4

605.4

600

601.4

5,403,346

Share prices on the most recent trading day - 28th September, 2012

The last trading share price was as followed:

Share prices recent trading day 28th Sept 2012

Company Name

Date

Open

High

Low

Close

Volume

Tesco (TSCO.L)

28 Sep 2012 (Fri)

337.2

337.2

330.3

332

18,278,827

Barclays PLC (BARC.L)

28 Sep 2012 (Fri)

218.35

222.5

214.85

214.85

36,379,896

Vodafone Group PLC (VOD.L)

28 Sep 2012 (Fri)

177.85

178

175.45

175.75

97,657,342

Unilever PLC (ULVR.L)

28 Sep 2012 (Fri)

2,284.00

2,289.00

2,252.00

2,252.00

2,901,207

BP PLC (BP.L)

28 Sep 2012 (Fri)

441.1

444.35

436.5

436.5

24,248,549

Last Dividend Paid

The dividend paid by the companies from 2000 to 2012 has been stated below. However, Barclays PLC (BARC.L) has not paid any dividend to their share holder within this time period i.e. 12years (uk.finance.yahoo).

Last Dividend paid

Company Name

Date

Dividend

Tesco (TSCO.L)

3-May-06

6.10 Dividend

Barclays PLC (BARC.L)

-

-

Vodafone Group PLC (VOD.L)

6-Jun-12

6.47 Dividend

Unilever PLC (ULVR.L)

8-Aug-12

18.92 Dividend

BP PLC (BP.L)

8-Aug-12

dividend

Beta of companies

The Beta of the companies is of 28-Sep-12 which is the last working day of the company (www.reuters.com).

Beta

Company Name

Date

Dividend

Tesco (TSCO.L)

28-Sep-12

0.7

Barclays PLC (BARC.L)

28-Sep-12

2.33

Vodafone Group PLC (VOD.L)

28-Sep-12

0.62

Unilever PLC (ULVR.L)

28-Sep-12

0.55

BP PLC (BP.L)

28-Sep-12

1.2

Value of the FTSE100

FTSE 100 (^FTSE)

Date

Open

High

Low

Close

Volume

4 Jan 2000 (Tue)

6930.2

6930.2

6662.9

6662.9

0

31 Dec 2009 (Thu)

5,397.90

5,431.90

5,390.40

5,412.90

173,847,500

28 Sep 2012 (Fri)

5,779.40

5,807.80

5,740.50

5,742.10

745,469,400

UK Current market yield for 3-month

Date

Coupon

Maturity

Price/yield

Price/yield change

28-Sep

0

12/31/2012

99.94 / 0.34

0.000 / 0.004

Part 2)

The average yearly returns for each company

The average yearly prices have been calculated by talking the monthly prices of the years (www.reuters.com).

The formula which has been used is as followed:

Average monthly Return= Current share price - previous share price - 1

Yearly Returns = Average of monthly returns

Tesco Plc

Years

Yearly Returns

2000

5.0637%

2001

-0.6281%

2002

-1.9222%

2003

2.6535%

2004

1.9924%

2005

0.3193%

2006

1.7761%

2007

1.4958%

2008

-1.7937%

2009

1.4284%

2010

0.1069%

2011

-0.3537%

2012

-1.8099%

Vodafone

Years

Yearly Returns

2000

-2.3935%

2001

-1.9654%

2002

-2.8192%

2003

1.8387%

2004

0.2593%

2005

-0.8203%

2006

1.2198%

2007

2.5922%

2008

-2.2249%

2009

0.3785%

2010

1.3594%

2011

0.7022%

2012

-0.1650%

Barclays PLC

Years

Yearly Returns

2000

3.2017%

2001

0.9484%

2002

-2.6096%

2003

2.3678%

2004

1.4779%

2005

0.4051%

2006

1.6279%

2007

-2.9357%

2008

-7.8855%

2009

8.9600%

2010

0.3772%

2011

-2.4913%

2012

3.0277%

Unilever PLC

Years

Yearly Returns

2000

4.2151%

2001

0.1160%

2002

0.5679%

2003

-0.8329%

2004

-0.0240%

2005

1.0688%

2006

0.9707%

2007

2.4806%

2008

-1.2201%

2009

2.1623%

2010

0.0041%

2011

0.8738%

2012

0.5270%

BP PLC

Years

Yearly Returns

2000

0.2347%

2001

0.0118%

2002

-1.6342%

2003

0.6240%

2004

1.0557%

2005

1.7659%

2006

-0.6019%

2007

0.7961%

2008

-0.8948%

2009

1.2626%

2010

-0.4285%

2011

0.1794%

2012

-0.4576%

Average return of the FTSE100 over the same periods

The return of FTSE100 has been calculated with same method as for companies (www.reuters.com).

FTSE100

Years

Yearly Returns

2000

-0.0120%

2001

-1.3773%

2002

-2.1543%

2003

1.1593%

2004

0.6225%

2005

1.3209%

2006

0.8759%

2007

0.3410%

2008

-2.9034%

2009

1.8133%

2010

0.8346%

2011

-0.4068%

2012

0.3882%

Using the data collected for the most recent date, determine the required return for each of the companies.

The data that is available required return for each ...