Understanding the Time Value Money Formula
UNDERSTANDING THE TIME VALUE MONEY FORMULA
TIME VALUE OF MONEY
TRIDENT UNIVERSITY INTERNATIONAL AVIE MARIE JOHNSTONE
STRATEGIC CORPORATE FINANCE
FIN501 MODULE 2 SESSION LONG PROJECT
PROFESSOR WALTER WITHAM
JANUARY 21, 2013
Summary After analyzing Target Corp’s financials, industry and future outlook, we recommend the purchase of 300 shares of the company’s stock at market order. As a leading discount retailer, only behind Wal-Mart, Target has made considerable growth in the industry over the past few years. Target offers an array of merchandise from women’s apparel, household products, toys and even food. One of the strengths of Target lies in its development of private brands, which helps create a strong image of the store in the customers’ minds. The company is able to further lower its costs through direct sourcing, buying merchandise at lower prices and strengthening its bargaining position with suppliers. While Target Corp hasn’t seen as much success with its other operations of Marshall Fields and Mervyn’s as it has with its namesake store, the company plans to invest resources into these two areas to turn around results. Target remains optimistic it will further penetrate the domestic retail market. (Kaleb Adams, Liza Debus). (12/03/2001). Target Corp’s current stock price of $39.15 is lower than the target price of $44.58 according to our valuation models. Accordingly, Target’s stock is currently undervalued. Ratio analysis also demonstrates steady results from Target’s core businesses. In addition, the technical analysis indicates positive results. For these reasons, we are
TIME VALUE OF MONEY
TRIDENT UNIVERSITY INTERNATIONAL AVIE MARIE JOHNSTONE
STRATEGIC CORPORATE FINANCE
FIN501 MODULE 2 SESSION LONG PROJECT
PROFESSOR WALTER WITHAM
JANUARY 21, 2013
Summary After analyzing Target Corp’s financials, industry and future outlook, we recommend the purchase of 300 shares of the company’s stock at market order. As a leading discount retailer, only behind Wal-Mart, Target has made considerable growth in the industry over the past few years. Target offers an array of merchandise from women’s apparel, household products, toys and even food. One of the strengths of Target lies in its development of private brands, which helps create a strong image of the store in the customers’ minds. The company is able to further lower its costs through direct sourcing, buying merchandise at lower prices and strengthening its bargaining position with suppliers. While Target Corp hasn’t seen as much success with its other operations of Marshall Fields and Mervyn’s as it has with its namesake store, the company plans to invest resources into these two areas to turn around results. Target remains optimistic it will further penetrate the domestic retail market. (Kaleb Adams, Liza Debus). (12/03/2001). Target Corp’s current stock price of $39.15 is lower than the target price of $44.58 according to our valuation models. Accordingly, Target’s stock is currently undervalued. Ratio analysis also demonstrates steady results from Target’s core businesses. In addition, the technical analysis indicates positive results. For these reasons, we are
References: Kaleb Adams, Liza Debus, Rebecca Fitzgerald, Ken Khouri, Chuck Pearlman. (12/03/2001). Analysis of the Target Corporation. Investment Recommendation: MARKET PERFORMER http://finance.yahoo.com/q/co?s=RTN+Competitors Financial Time. (Nov. 20, 2012). BAE Systems PLC. http://markets.ft.com/research/Markets/Tearsheets/Business-profile?s=BA.:LSE Irving Rivera. (March 6, 2012). ARBITRAGE PORTFOLIO: Your Money, Your Responsibility. http://www.arbitrageportfolio.com/arbitrage-pricing-theory/ (John Del Vecchio). (April 6, 2000). Dividend Discount Model. http://people.stern.nyu.edu/adamodar/New_Home_Page/articles/ddm.htm Manish. (February 29, 2012). Estimating the Cost of Common Stock. http://financetrain.com/estimating-the-cost-of-common-stock/