The project. The project requires you to conduct a valuation analysis of a publicly traded U.S. company that has been assigned randomly to you. If you want to switch companies with another student, you may do so, but please notify me if you do. If you want to select a company that is not on the list, you may do so if (i) the company is a publicly traded U.S. company, (ii) it is not a financial institution, and (iii) the company has not been assigned to another student.
The project consists of six sections.
Section 1 describes the company’s business, including its product lines, customer base, key suppliers, management team, and strategy. Please also identify a group of peer companies for your company.
Section 2 analyzes your company’s financial performance during 2012-2016, including analyses of the company’s (i) accounting profit rates (e.g., return on invested capital (“ROIC”), return on assets (“ROA”), return on equity (“ROE”)), (ii) economic profits, and (iii) stock price performance. These performance metrics should be compared with the corresponding metrics for the peer companies.
Section 3 describes the company’s capital structure during 2012-2016. Specifically, you should track its debt-to-value ratio as of the end of each fiscal year and compare its debt-to-value ratio with that of its peer companies. Please discuss whether there is a sound basis to believe that the company is at its target capital structure.
Section 4 includes a discounted cash flow valuation of the company. The analysis should include a discussion of the basis for your projections, your estimate of the company’s weighted average cost of capital, and your estimate of the company’s terminal value. In aIDition, you should provide a sensitivity analysis and a discussion of your final valuation matrix.
Section 5 contains a market multiples valuation of your company. You should use the peer companies identified in Section 1 for this analysis.
Finally, Section 6 provides recommendations as to how the company can create value for shareholders. The recommendations should be based on the sensitivity analysis you conduct and any benchmarking analysis you perform of your company’s performance versus its peer companies.
Company Name: Nvidia Corporation (NVDA)