Laura Martin case study
Question 1- Laura Martin says she gets "paid to talk" - to whom is she talking? Answer: Laura Martin is talking with investors. She would meet with many company representatives including the CEO, CFO, operating division chiefs and head of investor relations. She is in connections with these investors via telephone, fax, voice mail or email. It is approximately 900 individual per month.
Question 2- Given this crazy web of relationships, what are Martin's incentives? Can she anger the people who provide her information? What happens if she makes negative comments? Positive comments? When and how might she try to stand out from other analysts? Answer:
Question 3- What is happening to the role Martin plays in the economy? Will people like Martin exist in 30 years? Answer: People like Martin Exist in 30 years because each year “All-America Research Team” vote inverstors’ decision and Martin got high ratings among them which criterion evaluate on 10 points, industry knowledge 8.09 rating, written reports 7.26 rating, stock selection 7.20 rating, earnings estimates 6.83 rating and special services including company visits and conferances 6.70 rating. Therefore Martin thinks that “accesibility is important, I have to basically be available 24 hours a day”. So, Martin is important player in the economy.
Question 4- What can be said of how good analysts are at their jobs? Answer:
Question 5- What are the tradeoffs in using multiples versus the DCF analysis? Answer: DCF Valuation ; Martin forecast revenue for each year for from the firm’s financial data,select appropriate discount rate based on WACC, discount each cashflow back to it present value, obtain the terminal value through an application of terminal value multiple, using DCF method, Martin calculates the price of Cox’s share to be $54.29. Multiple Valuation; Identify comparable firms that have growth, cashflow and risks similar to those of targetfirm whose value is in...
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