2 page report – finance

I want you to write a two page report based on the MACY’s excel data that I posted.

I have posted 2 sample reports so you know what is expected in the report. 

2

>MACY

‘

S

Financials

1%

-4%

1%

2.5% 2.5%

2.5%

*

3.

3.38% 3.38%

.

8

,000

9

4

.00

605

6

,000

Equity intrinsic value

,3

.50

Shares 309605426
Implied price per share

.24

.00

16.3

30

0

Equity intrinsic value

,070.67

Shares 309605426

Implied price per share

%

1 2 3 4 5

9

8

19

85

5

Market value of non-operating assets 1,

Equity intrinsic value

Shares 309605
Implied price per share

%

1 2 3 4 5

)

5

7

Terminal value

8

PV

1

928

9

Market value of debt 6851716.3

Market value of non-operating assets 1,162

Equity intrinsic value

6

5

Shares 309605

Implied price per share

.

1 2 3 4 5

1,2

1,208 1,206 1,204

Terminal value

PV

9

46

1 2 3 4 5

.99

Terminal value

1

PV

.

Market value of debt

Market value of non-operating assets 1,162

Equity intrinsic value

Shares 309605

Implied price per share

2020

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Millions Millions Millions Millions Millions Millions Millions Millions Millions Millions

1

1,738

(t)

30%

18% 18% 18% 18%

6

2

.05

.1

.15

2,426

63

3

53

13 19 32 33 34

459

2,069

1,325 1,287 1,208 1,206 1,204

)

FCFF 2,069 2,344 1,548 1,951 2,216 1,504 1,325 1,287 1,208 1,206 1,204

01

47 71

124 127

-273

8

-211

1,584 1,570 1,539 1,539 1,540

FCFF 2,069 2,344 1,548 1,951 2,216 1,504 1,325 1,287 1,208 1,206 1,204

7

7

-48 -48

-47 -47

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

,538

)

6)

1 2 3 4 5

)

212 209

390

)

)

)

0 0 1 2 3 4 5

2,678 2,800 2,039 1,371 1,864 1,738

55 57 39 40 41 42 43 44

Settlement charges

(88)

(390) (395) (363) (367) (321) (261)

0

0 0 10

-32

-28

3 2 2 2 4 11 25 26 27 28 29 30

1422

1424

39

(loss)

0 0 2 8 11 10

3

3

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

2

371

424

363

420 431

0

420

479

2

3

9

7

3,743 3,743

3,897 3,897

496

478

732

897

763 782 801

124

76

309 22 43 43 44 45 46 47

1,594 1,526

1739

5

355 362

296

172

181

400

5,075

1,443 1,148 1,238

‘

4 4 4 3 3 3 3 3 3 3 3 3

652

668 685 702

5

0 3

0 0 0 0 0 0

5,378

6,436 6500 6598 6763 6932 7105

19386 19677 20169 20673 21190

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Net income $1,335 $ 1,486 $ 1,526

1099 1100 1101 1102 1103

Restructuring, impairment, store closing and other costs 5 88 87 288 479 186 136 137 138

141

Settlement charges 0 0 98 105 88 89 90 91 92 93

991

61 62 73 65 61 58 63

Gains on sale of real estate

.0

.9

-16

(14)

2.0

5.1

7

22 (45) (1)

44

221 (87)

-7

0 37 17 21

23 (1) (61) 1.0 2.0 3.1 4.1 5.1

23 101

162 55

48 129

44

-16 7

125

(136)

14

29 (1)

10 1.0 2.0 3.1 4.1 5.1

1.0 2.0 3.1 4.1 5.1

(256)

0 0 (212) 1.0 2.0 3.1 4.1 5.1

66 132 172 204 673

95

29

(2) 2 3.0 4.0 5.1 6.1 7.1

1.0 2.0 3.1 4.1 5.1

400 1,044

1.0 2.0 3.1 4.1 5.1

-11

(9) (4) 1.0 2.0 3.1 4.1 5.1

1.0 2.0 3.1 4.1 5.1

(421) (456)

24 133

61 (15) 16

18.0

(316) (1) 0 1.0 2.0 3.1 4.1 5.1

258

36 6 45 46.0 47.0 48.1 49.1

0 0 5 6 13 7 8.0 9.0

132 179

1,836 2,273 2,246

1,836 2,273 2,246 1,109 1,334 1,513

1.0 2.0 3.1 4.1 5.1

388

383

361

2 2 2 2 4 12 25

1,049 1,020 1,036 1,061 1,058 991 962 1,022 1,019 1,010 1,001 1,003

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2024

Net sales

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Credit Card Revenues, Net 0% 0% 0% 0%

3% 3% 3% 3% 3% 3% 3%

Cost of sales

-60% -60%

-60% -61% -61% -61% -61% -61% -61% -61%

Gross margin

40% 40%

0% 0% 0% 0% 0% 0% 0% 0%

Selling, general and administrative expenses

-30% -31%

–

-36% -36% -36% -36% -36% -36%

Gains on sale of real estate 0% 0% 0% 1% 1% 2% 2% 2% 2% 2% 2% 2%
Restructuring, impairment, store closing and other costs

-0% -0%

-2% -1% -1% -1% -1% -1% -1% -1%

Settlement charges 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Operating income (loss)

10% 10% 8% 5%

7% 7% 7% 7% 7% 7%

Benefit plan income, net 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Settlement charges 0% 0% 0% 0% -0% -0% -0% -0% -0% -0% -0% -0%
Interest expense -2% -1% -1% -1% -1% -1% -1% -1% -1% -1% -1% -1%
Gains (losses) on early retirement of debt -0% 0% -0% 0% 0% 0% -0% -0% -0% -0% -0% -0%
Interest income 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Income (loss) before income taxes 8% 8% 9% 6% 4% 6% 6% 6% 6% 6% 6% 6%
Federal, state and local income tax benefit (expense)

-3% -3% -2% -1% 0% -1% -1% -1% -1% -1% -1%

5% 5% 5% 4% 2% 6% 4% 4% 4% 4% 4% 4%

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2024 2025

Current Assets:

Cash and cash equivalents

11% 5% 7% 7% 6% 6% 6% 6% 6% 6%

Receivables 2% 2% 3% 3% 2% 2% 2% 2% 2% 2% 2%
Merchandise Inventories

25%

27% 26% 27% 27% 27% 27% 27% 27%

Prepaid expenses and other current assets 2% 2% 2% 2% 3% 3% 3% 3% 3% 3% 3%
Total Current Assets 40% 40%

38% 39% 39% 39% 39% 39% 39% 39%

Property and Equipment – net 37% 37% 37%

35% 35% 35% 35% 35% 35%

Goodwill

18%

20% 20% 20% 20% 20% 20% 20%

Other Intangible Assets – net 2% 2% 2% 3% 2% 2% 2% 2% 2% 2% 2%
Other Assets 3% 3% 4% 4% 4% 4% 4% 4% 4% 4% 4%
Total Assets 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Current Liabilities:

Short-term debt 2% 0% 3% 2% 0% 0% 0% 0% 0% 0% 0%
Merchandise accounts payable 8% 7% 7% 7% 8% 9% 9% 9% 9% 9% 9%
Accounts payable and accrued liabilities

18% 17% 18% 18% 18% 18% 18% 18%

Income taxes 2% 1% 1% 2% 2% 1% 1% 1% 1% 1% 1%
Deferred income taxes 2% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Total Current Liabilities 26%

28% 26% 27% 27% 27% 27% 27% 27%

Long-Term Debt 31% 34% 34%

30% 25% 25% 25% 25% 25% 25%

Deferred Income Taxes 6% 7% 7% 7% 6% 6% 6% 6% 6% 6% 6%
Other Liabilities 8% 10% 10% 9% 8% 8% 8% 8% 8% 8% 8%
Shareholders’ Equity:
Common stock (307.5 and 304.8 shares outstanding) 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Additional paid-in capital

5% 3% 3% 3% 3% 3% 3% 3% 3% 3%

Accumulated equity

34% 31% 31% 37%

42% 42% 42% 42% 42%

Treasury stock

-9%

-8%

-7% -7% -7% -7% -7% -7%

Accumulated other comprehensive loss -3%

-5% -5% -4% -5% -5% -5% -5% -5% -5%

Total Macy’s, Inc. Shareholders’ Equity 0% 25%

29% 34% 34% 34% 34% 34% 34%

Noncontrolling interest 0% 0% 0% -0% -0% 0% 0% 0% 0% 0% 0%
Total Shareholders’ Equity 29% 25% 21% 22% 29% 34% 34% 34% 34% 34% 34%
Total Liabilities and Shareholders’ Equity 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2024 2025

Net sales 1% 1% -4% -4% -4% 0% 0% 0% 0% 0% 0%
Credit Card Revenues, Net

ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! 7% 9% 0% 0% 0% 0% 0%

Cost of sales 1% 1% -2% -5% -3% 0% -0% -0% -0% -0% -0%
Gross margin 1% 0%

ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! 100%

34% 25%

Selling, general and administrative expenses -0% -1% 1% 9% -3% 1% -0% -0% -0% -0% -0%
Gains on sale of real estate ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! -1%

0% 0% 0% 0% 0%

Restructuring, impairment, store closing and other costs

-1%

-61%

-1% -1% -1% -1% -1%

Settlement charges ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! 100% 51% 34% 25%
Operating income (loss) 1% 5% -27%

36% -7% 0% 0% 0% 0% 0%

Benefit plan income, net ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! 4%

3% 3% 2% 2% 2%

Settlement charges ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! 7%

-1% -1% -1% -1% -1%

Interest expense -8% 1% -8% 1%

-0% -0% -0% -0% -0%

Gains (losses) on early retirement of debt -100% ERROR:#DIV/0! -100% ERROR:#DIV/0! ERROR:#DIV/0!

-3% -3% -3% -3% -4%

Interest income -33% 0% 0% 100%

4% 4% 4% 4% 4%

Income (loss) before income taxes 9% 4% -30%

-6% 0% 0% 0% 0% 0%

Federal, state and local income tax benefit (expense) 5% 7% -30%

-0% -0% -0% -0% -0%

Net income (loss) 11% 3% -30% -42%

0% 0% 0% 0% 0%

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2024 2025

Current Assets:

Cash and cash equivalents 24% -1%

17% 12%

1% 1% 2% 2% 2%

Receivables 18% -3% 32% -6% -30% 10% 1% 1% 2% 2% 2%
Merchandise Inventories 5% -3% 2% -2% -4% 2% 1% 1% 2% 2% 2%
Prepaid expenses and other current assets 16% 17% -3%

-5% 1% 1% 2% 2% 2%

Total Current Assets 10% -1%

-0% 0% -3% 1% 1% 2% 2% 2%

Property and Equipment – net -3% -2% -2% -8% -5% -1% 1% 1% 2% 2% 2%
Goodwill 0% 0% 4% 0% 0% 0% 1% 1% 2% 2% 2%
Other Intangible Assets – net -6% -6% 4% -3% -2% -2% 1% 1% 2% 2% 2%
Other Assets 19% -3% 26% -9% 8%

1% 1% 2% 2% 2%

Total Assets 3% -1% -4% -4% -1% -2% 1% 1% 2% 2% 2%

Current Liabilities:

Short-term debt

1% 1% 2% 2% 2%

Merchandise accounts payable 7% -6% -4% -7% 12% 4% 1% 1% 2% 2% 2%
Accounts payable and accrued liabilities 8% 11% 7% 7% -8% 3% 1% 1% 2% 2% 2%
Income taxes 2% -18%

-16% -43% 1% 1% 2% 2% 2%

Deferred income taxes -2% -100% ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0!
Total Current Liabilities 13% -11% 13% -1% -8% 1% 1% 1% 2% 2% 2%
Long-Term Debt -1% 8% -3% -6% -11% -20% 1% 1% 2% 2% 2%
Deferred Income Taxes 3% 13% 2% -2% -20% 8% 1% 1% 2% 2% 2%
Other Liabilities -9% 33% -4%

-11% -5% 1% 1% 2% 2% 2%

Shareholders’ Equity:

Common stock (307.5 and 304.8 shares outstanding) 0% 0%

0% 0% 0% 1% 1% 2% 2% 2%

Additional paid-in capital

-1% 10% -4% 1% 1% 2% 2% 2%

Accumulated equity 22% 18%

-4% 19% 11% 1% 1% 2% 2% 2%

Treasury stock -8% 5% -14% -11% -2% -9% 1% 1% 2% 2% 2%
Accumulated other comprehensive loss -29% 61% -3% -14% -19% 31% 1% 1% 2% 2% 2%
Total Macy’s, Inc. Shareholders’ Equity ERROR:#DIV/0! ERROR:#DIV/0!

2% 33% 12% 1% 1% 2% 2% 2%

Noncontrolling interest ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0!

-100% ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0! ERROR:#DIV/0!

Total Shareholders’ Equity 3% -14% -21% 2% 33% 12% 1% 1% 2% 2% 2%
Total Liabilities and Shareholders’ Equity 3% -1% -4% -4% -1% -2% 1% 1% 2% 2% 2%

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

5% 5% 4% 2% 6% 4% 4% 4% 4% 4% 4%

132%

127%

129% 127%

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

7% 7% 5% 3% 8% 6% 6% 6% 5% 5% 5%

7% 7% 5% 3% 8% 6% 6% 6% 5% 5% 5%

24% 28% 43%

30% 42% 42% 42% 42% 42% 42%

57% 26%

58% 58% 58% 58% 58% 58%

5% 5% 3% 1% 6% 3% 3% 3% 3% 3% 3%

5% 5% 3% 1% 6% 3% 3% 3% 3% 3% 3%

0.00 0.00 0.00 0.00 0.00 0.00 0.00

-2.87

																																																																																																																																																																																																																																																																																																																																																																																																																															Assumptions																							0	20 Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper						1											4	201									5						20	1		6			201				7				201	8			20	19												2020						20	21					20		22	202																	3						20	24	Beyond
Sales growth																																																																														1%			–																																		4%														-4%																																																																																																																																																		0%																																																																																																																														2%				2.																								5%
Terminal Growth Rate
Interest Expense – Based on		Debt	Cost of Debt %					3.3																			8%	38%					3.38%
All Others Grow at the same rate as Sales
Highlighted yellow cells are numbers that stood out
P/E Multiples Valuation
Benchmark P/E		26				44
Earnings available to common shareholders			1,	73
					Equity intrinsic value				45	40	30
					Shares							309	42	remember to adjust for millions!
					Implied price per share	0.15
P/S Multiples Valuation
Benchmark P/S		0.83
Sales Revenue	$ 24,9	71
20,7		88	57
0.07
EV/EBITDA Multiples Valuation
Benchmark EV/EBITDA		14
EBITDA	2,700,000
Enterprise value	38,444,6		25
			Market value of non-operating assets				1,1	62
		Market value of debt			685	17			39	58
3	1,594
0.			10
Equity Cash Flow Model: Discounting Equity Cash Flows at Cost of Equity
Ke (Cost of Equity)	9.	12
Equity cash flow (FCFE)		1,584		1,570		1,	53		1,	539		1,540
			Terminal value			23	46
			PV	1452			13			11	1086	9	95	15	41
Equity value of operations	21450678
162
21,451,840
69.			29
Corporate Valuation Model: Discounting Free Cash Flows at WACC
	WACC (Weighted Average Cost of Capital)	6.	76
Free cash flow (		FCFF		1,	32					1,	28					1,208					1,206					1,	204
28		92
		124	1	129	992	868	20854
Value of operations	26012	27
1	91		172
			61	89
Adjusted Present Value Model: Discounting Unlevered Cash Flows at Unlevered Cost of Capital
	Ku (Unlevered Cost of Capital)		6.88%
FCFF			1,325	87
28174
1240	1	127		98	924	8		63	20202
Unlevered value of operations	25	34	48
Interest tax savings = IntExp * tax Rate	–		47	– 47.62	– 47.25	– 46.89	– 46.52
– 1,08	9.0
– 44.	90	– 41.69	– 38.71	– 35.	93	–	33	36	– 780.86
Value of tax shield	– 975,444
6851716.33039058
31,219,758.30
100.84
Cash Flow Computations										2014										2015					2016								2017							2018								2019						2021							2022							2023						2024
Year Ended…
Shares Outstanding
Figures in…											Millions
OpInc		2,678		2,800		2,039		1,		37		1,864	1,739	1,740	1,741	1,742	1,7			43
		Tax Rate				30%					31%												25%															-2%	1											9%															18%
NOPAT = OpInc x (1-t)	1874	1936	1	431	1025	1903		141	14	1	8.0	1		420		1422		1	424	1426.2
Dep & Amort Exp	1,012	1,031	1,047		1,044	946	947	1,008	1,006	998	990	993
OCF = NOPAT + Dep & Amort	2,886	2,967	2,	478				2,069	2,849	2,	363		2,426	2,420	2,414	2,419
ΔNOWC		-28	-341	-13	-68
ΔGFA	754	906	877	646	927	1,088	1,119	1,180	1,175	1,	181
FCFF = OCF – ΔNOWC – ΔGFA			2,344			1,548			1,951			2,216			1,504
Interest Expense, net		(390)		(395)		(363)		(367)		(321)		(261)	(260)	(259)	(	258	(257)		(256)
ΔDebt	-92	519	-238	-433		-7	-1,153	121
Int(1-t)		-273	-2		55	-274		-32	-213	–	212		-211	-210	–	209
PfdCF
FCFE = FCFF + ΔDebt – Int(1-t) – PfdCF	2,250	3,	136	1,5	65	1,792	1,843	564
Int(t)		-11	-122	-108	-93			-48			-47
UCF = FCFF + Int(t)	1,952	2,222	1,440	1,858	2,223	1,456	1,277	1,240	1,160	1,159	1,157
Consolidated Statements of Income – USD ($) $ in Thousands								2013
Income Statement [Abstract]
		Net sales	$27,686	$ 27,931	$ 28,	105	$ 27,079	$ 25,908	$ 24,939	$ 24,971	24972	24973	24974	24975	24976
		Credit Card Revenues, Net	656		702	768	769	770	771	772	773
		Cost of sales			-16	(16,725)	(16,863)	(16,	496	(15,	66	(15,181)	(15,215)	-15214	-15213	-15212	-15211	-15210
		Gross margin	1	1,148	11,206	11,242	10,583
		Selling, general and administrative expenses	-8,482	(8,440)	(8,	355	(8,468)	(9,257)	(8,954)	(9,039)	-9038	-9037	-9036	-9035	-9034
			Gains on sale of real estate	544	389	391	392	393	394
			Restructuring, impairment, store closing and other costs	-5		(88)		(87)	(	288	(		479	(	186		(136)	-135	-134	–	133	–		132	-131
						Settlement charges
		Operating income (loss)	2,661		1739	1740	1741	1742	1743
		Benefit plan income, net
(98)	(105)	-87	-86	-85	-84	-83
		Interest expense	-425	-260	-259	-258	-257	-256
		Gains (losses) on early retirement of debt	–	137	(17)	(33)	-31	-30	-29
		Interest income
		Income (loss) before income taxes	2,102	2,290	2,390	1,678	965	1,516	1,420	1421	1423	1425
		Federal, state and local income tax benefit (expense)	-767	(804)	(864)	(608)	(346)	(322)	-321	-320	-319	-318	-317
	Net income		$1,335	1,486		1,526	1,070	619	1,555	1,098		1099		1100		1	101		1102		1103
Net loss attributable to noncontrolling interest
Net income attributable to Macy’s, Inc. shareholders		$ 1,486		$ 1,526	$ 1,072	$ 627	$ 1,566	$ 1,108
Basic earnings per share attributable to Macy’s, Inc. shareholders	$3.29	$ 3.93	$ 4.30	$ 3.26	$											2.0	$												5.1	$ 3.60
Diluted earnings per share attributable to Macy’s, Inc. shareholders	$3.24	$ 3.86	$ 4.22	$ 3.22	$ 2.02	$ 5.10	$ 3.56
Consolidated Balance Sheets – USD ($) $ in Thousands
		Current Assets:
		Cash and cash equivalents	$		1,836	$		2,273	$		2,246	$	1,109	$ 1,297	$ 1,455	$ 1,162	1174	1191	1	221		125	1283
		Receivables	438	558	522			400	404	410	442
		Merchandise Inventories	5,308	5,557	5,417	5,506	5,399	5,178	5,263	5316	5395		553	5669	5810
		Prepaid expenses and other current assets		361	493	408	650	620	626	636	651		668	684
		Total Current Assets	7,876	8,688	8,580	7,	652	7,626	7,646	7,445	7519		763		782		801	8219
		Property and Equipment – net	8,196	7,930	7,800	7,616	7,017	6,672	6,637	6703	6804	6974	7148		732
		Goodwill			3,743			3,	897	3,908	3947	4006	4106	4209	4314
		Other Intangible Assets – net	561	527	514	498	488	483	490	502	515	528
		Other Assets	615	711	813	880	726	733	744
		Total Assets	20,		991	21,620	21,330	20,576	19,851	19,583	19,194		19386		19677		20169		20	673		21190
		Current Liabilities:
		Short-term debt	463	642
		Merchandise accounts payable	1,579	1,691	1,423	1,590	1,655	1672	1697	1783	1827
		Accounts payable and accrued liabilities	2,610	2,810	3,109	3,333	3,563	3,271	3,366	3400	3451	3537		362	3716
		Income taxes		296	227	352	168	170	177	185
		Deferred income taxes	407
		Total Current Liabilities		5,075	5,726	5,728	5,647	5,	179	5,232	5284	5364	5498	5635	5776
		Long-Term Debt	6,806	6,714	7,233	6,995	6,562	5,861		4,708	4755	4826	4947	5071	5198
		Deferred Income Taxes		1,238	1,273		1,443	1,477	1250	1269	1301	1333	1367
		Other Liabilities	1,821	1,658	2,201	2,123	1,877	1,662	1,580	1596	1620	1660	1702	1744
		Shareholders’ Equity:
		Common stock (307.5 and 304.8 shares outstanding)
		Additional paid-in capital	3,872	2,522	1,048	621	617	676	659	720
		Accumulated equity	5,108	6,235	7,340	6,334	6,088	7,246	8,050	8131	8252	8459	8670	8887
		Treasury stock	-2,002	-1,847	(1,942)	(1,665)	(1,489)	(1,456)	(1,318)	-1331	-1351	–	138	-1420	-1455
		Accumulated other comprehensive loss	-931	-665	(1,072)	(1,043)	(896)	(724)	(951)	-961	-975	-999	-1024	-1050
		Total Macy’s, Inc. Shareholders’ Equity		5,378	4,250	4,323	5,745		6,436		6500		6598		6763		6932		7105
		Noncontrolling interest					(1)	(12)
		Total Shareholders’ Equity	6,051	6,249	4,253	4,322	5,733
		Total Liabilities and Shareholders’ Equity	$20,991	$21,620	$ 21,330	$ 20,576	$ 19,851	$ 19,583	$ 19,194
Consolidated Statements of Cash Flows $ in Thousands
Cash flows from operating activities:
$ 1,070	$ 619	$ 1,555	$ 1,098
Adjustments to reconcile net income to net cash provided by operating activities:
139	140
Depreciation and amortization		1,049		1,020		1,036		1,061		1,058		962		1,022		1,019		1,010		1,001		1,003
Stock-based compensation expense	6	4.0	65.0	6	6.1	6	7.1	68.1
(92)		(212)	(209)	(544)	(389)	–	388	-387.0	-386.0	-384.9	–	383
Amortization of financing costs and premium on acquired debt	(8)	(5)		(14)		(45)		(15)	-14.0	-1	3.0	-12.0	-10.9	-9.9
Changes in assets and liabilities:											1.0											3.1											4.1
(Increase) decrease in receivables	(58)	120		(61)	-60.0	-59.0	-58.0	-56.9	-55.9
(Increase) decrease in merchandise inventories	-191	(249)	(60)	107	-86.0	-85.0	-84.0	-82.9	-81.9
Decrease in prepaid expenses and other current assets		(2)	(3)	22.0	23.0	24.1	25.1	26.1
Increase in other assets not separately identified
Increase (decrease) in merchandise accounts payable	(21)	(78)	(132)	56.0	57.0	58.1	59.1	60.1	Used a rolling average for depreciation
Increase (decrease) in accounts payable, accrued liabilities and other items not separately identified	-33	116	(185)	(186)	45.0		46.0	47.1		48.1		49.1
Increase (decrease) in current income taxes	(65)	(69)	(114)	-135.0	-134.0	-133.0	-131.9	-130.9
Increase (decrease) in deferred income taxes	(142)	(134)		(421)	112	113.0	114.0	115.1	116.1	117.1
Increase (decrease) in other liabilities not separately identified	-75	197
Increase (Decrease) in Other Noncurrent Assets and Liabilities, Net	(137)	(108)	(129)	(156)	-155.0	-154.0	-153.0	-151.9	-150.9
Net cash provided by operating activities	2,179	2,549	2,709	1,984	1,801	1,976	1,735	1736.0	1737.0	1738.1	1739.1	1740.1
Cash flows from investing activities:
Purchase of property and equipment	-698	(607)	(770)	(777)	(596)	(487)	(657)	-656.0	-655.0	-654.0	-652.9	-651.9
Capitalized software	-244	(298)	(336)		(316)	(273)	(275)	-274.0	-273.0	-272.0	-270.9	-269.9
Acquisition of Bluemercury, Inc., net of cash acquired
Disposition of property and equipment	411	474	475.0	476.0	477.1	478.1	479.1
Other, net	(57)	(74)		(4)
Net cash used by investing activities	-781	(788)	(970)	(1,092)	(243)	(351)		(456)	-455.0	-454.0	-453.0	-451.9	-450.9
Cash flows from financing activities:
Repayments of Debt	(754)	(988)	(1,149)	-1148.0	-11	47.0	-1146.0	-1144.9	-1143.9
Proceeds from Issuance of Commercial Paper	1,000	499
Financing costs		(9)
Debt repaid	-1,803	(124)	(870)	(152)
Dividends paid	-324	(359)	(459)	(461)	(463)	-462.0	-461.0	-460.0	-458.9	-457.9
Increase (decrease) in outstanding checks	-88	(83)	17.0	19.1	20.1	21.1
Acquisition of treasury stock	-1,397	(1,571)	(1,901)	(2,001)
Issuance of common stock	234	315	163	50.1
Proceeds from noncontrolling interest	10.1	11.1	12.1
Net cash used by financing activities	-2,389	(1,324)	(1,766)	(2,029)	(1,426)	(1,446)	(1,544)	-1543.0	-1542.0	-1541.0	-1539.9	-1538.9
Net increase (decrease) in cash, cash equivalents and restricted cash	-991	437	(27)	(1,137)	(265)	-264.0	-263.0	-262.0	-260.9	-259.9
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, beginning of period	2,827	1,202		1,334		1,513	1514.0	1515.0	1516.1	1517.1	1518.1
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, end of period	1,248	1249.0	1250.0	1251.1	1252.1	1253.1
Supplemental cash flow information:
Interest paid	585	413	396	328	329.0	330.0	331.1	332.1	333.1
Interest received	26.0	27.0	28.1	29.1	30.1
Income taxes paid (net of refunds received)	$738	$ 835	$ 834	$ 635	$ 352	$ 496	$ 345	346.0	347.0	348.1	349.1	350.1
Depreciation Expense Consolidated Statements of Cash Flows
COMMON SIZE INCOME STATEMENT					2025
																																															100%
																																																					3%
			-60%									–	61%
				40%								39%
	-31%						-30%								-3																																6%	36%
																																										-0%																																																	-1%
							10%																									7%
																		-3%
	Net income (loss)
COMMON SIZE BALANCE SHEET
				11%
					26%														27%
				37%
						35%																		34%
			17%			19%								20%
			13%	15%		16%
		24%			28%
			33%
				12%
			29%												42%
				-9%								-8%									-7%
												-5%
	21%			22%
GROWTH OF INCOME STATEMENT
																																														ERROR:#DIV/0!
						-6%					-100%		51%
160%	-28%
1660%	231%	66%		-27%
	-33%
–	32%
	-16%
-13%		-19%
-430%
175%			127%
	-42%		57%
	–	43%	-111%	-926%
151%		-29%
GROWTH OF BALANCE SHEET
-51%			-20%
-15%	59%
				-11%
	-18%
273%	-84%	745%	-52%	-93%	95%
-23%	55%
-12%
-25%
-35%	–						58%	-41%
			-14%
	-21%
-133%	1100%
Useful Ratios & Other Figures
PM (Net Profit Margin = NI/Revenue)
TAT (Total Asset Turnover = Revenue/Total Assets)		129%		132%	131%	130%	124%	121%	118%
EM (Equity Multiplier = Total Assets/Total Equity)
ROE (Return on Equity = NI/Total Equity = PM*TAT*EM)
ROA (Return on Assets = NI/Total Assets = PM*TAT)
d (Dividend Payout Ratio = Dividends/NI … note: result is POSTIVE)	74%
b (Retention Ratio = 1-d)	76%	72%	70%
SGR (Sustainable Growth Rate = b*ROE)
IGR (Internal Growth Rate = b*ROA)
TIE (Times Interest Earned Ratio = EBIT/Interest)
DOL (Degree of Operating Leverage [point estimate] = Gross Profit/OpInc)	4.18	4.02	5.19								0.00
Days of sales in cash ( = Cash/[Revenue/365])	29.70	29.17	14.95	18.27	21.29	16.98	17.15	17.41	17.85	18.29	18.75
Inventory Turnover ( = COGS/Avg Inventory … note: Avg Inventory = [BOY+EOY]/2 )	-3.08	-3.07	-3.02		-2.87	-2.91	-2.88	-2.84	-2.78	-2.72	-2.65
Receivables Turnover (= Sales/Avg Receivables … note: Avg Receivables = [BOY+EOY]/2 )	69.05	65.21	55.15	47.98	56.36	65.45	62.12	61.35	60.15	58.69	57.26
Purchases ( = COGS + Δ inventory)	(16,476)	(17,003)	(16,407)	(15,773)	(15,402)	(15,130)	(15,161)	(15,133)	(15,077)	(15,073)	(15,068)
Payables Turnover ( = Purchases/Avg Payables … note: Avg Payables = [BOY+EOY]/2 )	-11.09	-1	0.95	-9.84	-8.56	-7.98	-8.80	-8.58	-8.47	-8.31	-8.11	-7.91
Days in inventory ( = 365/Inventory Turnover)	-118.56	-118.77	-120.84	-127.04	-127.15	-125.24	-126.90	-128.49	-131.08	-134.36	-137.73
Days in receivables ( = 365/Receivables Turnover)	5.29	5.60	6.62	7.61	6.48	5.58	5.88	5.95	6.07	6.22	6.37
Operating cycle ( = Days in Inventory + Days in Receivables)	-113.27	-113.17	-114.23	-119.43	-120.68	-119.66	-121.02	-122.54	-125.01	-128.14	-131.36
Days in payables ( = 365/Paybales Turnover)	-32.92	-33.34	-37.11	-42.64	-45.73	-41.48	-42.56	-43.08	-43.91	-45.02	-46.16
Cash cycle ( = Operating Cycle – Days in Payables)	-80.35	-79.83	-77.12	-76.79	-74.95	-78.18	-78.46	-79.47	-81.10	-83.13	-85.20

COMPARABLE COMPANIES

Debt

Tax Rate

%

0.79

0.95

0.83

0.78

Comparable Firms
Ticker	P/E ratio	P/S ratio	EV/EBITDA ratio	Beta	Equity (Market Cap)		Unlevered Beta
TJMAXX	TJX	38.68	1.72	24.21	0.71	16,510,000	64,135,000	2	0.78	0.59
WALMART	WMT	24.62	0.69	12.64	0.30	76,590,000	367,615,000	24.49%	0.26
TARGET	TGT	22.96		0.79	11.20	16,700,000	64,687,000	21.07%	0.66
JC PENNY	JCPNQ	24.59	0.01	16.48	1.39	6,130,000	99,326,000	8.08%	1.32
KOHL’S	KSS	37.53	0.16	7.34	1.76	7,690,000	3,286,000	23.31%	0.63
DILLARD’S	DDS	17.82	0.10	14.43	0.91	615,610,000	616,060,000	33.60%	0.55
BEST BUY	BBY	18.85	0.61	9.81	1.50	5,300,000	26,324,000	23.71%	1.30
HOME DEPOT	HD	26.43	2.58	17.80	1.06	41,750,000	287,680,000	23.58%
Average of Comparable Firms	26.44	14.24
Median of Comparable Firms	24.61	0.65	13.54	0.64

DEBT

Debt
3.38%

3.38%

3.38%

3.38% Cost of Debt %
4,708

5

2020 2021 2022 2023 2024 2025

539 553

575

903.5

3.88%
2.88%
Average bond YTM
Median bond YTM
Yield on Bonds (using median)
We could also use “synthetic ratings” to estimate the cost of debt…
based on TIE (Times Interest Earned ratio)
based on Altman Z-Score
$6,851,716.33	Market Value of Debt
Balance Sheet Debt
$2,805.42	Damodaran’s method
-261	Interest Expense from Income Statement
BV Debt from Balance Sheet
Assumed Years to maturity
Operating Leases
$4,046.29	PV of Operating Lease Expenses
Expected Op. Lease Payments:
2026
	575	622		903.5
Based on data listed under “Credit Facilities and Long-Term Contractual Commitments” in HanesBrands 10-k

COST OF CAPITAL

Michael Dimond: from treasury.gov for date of interest

Tax Rate

Unlevered Beta

Ku (Unlevered Cost of Capital)

Michael Dimond: Computed using CAPM and Levered Beta

Michael Dimond: WACC = we*Ke + wd*Kd*(1-t)
where:
we = MV Equity / (MV Equity + MV Debt)
wd = MV Debt / (MV Equity + MV Debt)
If preferred stock exists, include factors for weight of preferred stock and required return for preferred stock.

WACC (Weighted Average Cost of Capital)

2.19% 3.38% 6.76% 6.88% 9.12%

Costs of Capital
	2.19%	Rf (Risk-free Rate)	source: https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=longtermrateYear&year=2020 TREASURY 20-Yr CMT on filing date
6.00% Michael Dimond: Estimated. Consider the implied market return (Rf+MRP) to make sure this is reasonable.	Market Risk-Premium (MRP)
18.53% Michael Dimond: Same rate used in NOPAT computation for subject company.
6,851,716.3 Michael Dimond: From “Debt” tab	MV Debt
11,687,604.8 Michael Dimond: Market Capitalization as of the date of interest	MV Equity
$ 37.75	Adjusted Close on filing date
309,605,426	Shares outstanding at time of filing
0.78 Michael Dimond: From “Comparable Firms” tab
6.88% Michael Dimond: Computed using CAPM and Unlevered Beta
1.15 Michael Dimond: Computed using Hamada’s formula: Bu*(1+D/E(1-t))	Michael Dimond: from treasury.gov for date of interest	Levered Beta (“Bottom-up Beta”)
	9.12%	Michael Dimond: Estimated. Consider the implied market return (Rf+MRP) to make sure this is reasonable.	Ke (Cost of Equity … Common Equity)
3.38% Michael Dimond: From “Debt” tab	Michael Dimond: Same rate used in NOPAT computation for subject company.	Michael Dimond: From “Debt” tab	Michael Dimond: Market Capitalization as of the date of interest	Kd (Cost of Debt … Before Tax)
	6.76%	Michael Dimond: From “Comparable Firms” tab	Michael Dimond: Computed using CAPM and Unlevered Beta
Remember: Rf < Kd < WACC < Ku < Ke
7.00%

PepsiCo Analyst Report

Overview:

Overall, after our research and studying the fortune 500 company PepsiCo. we have concluded that there will not be any staggering fluctuations in the business. We issue a HOLD recommendation on PepsiCo. In our opinion the ideal position in this should be to hold as, the growth is negligible right now, the future is unpredictable seeing the current situation, it is better to hold the current value. (PEP) with a target price of $156.00, with a current stock price of $134.66 and a low of $130.00. Pepsico. has had a steady foothold in the industry for years and this remains today. We do not see this changing and in light of the economy today, we do not see anything but steadiness from Pepsi. Key points in factoring the result of the continued steady success of PepsiCo are it is a mature company with brand recognition and a quality business model to manage income and expenses, steady sales and operating income over the years, and a full line of branded products that offer competitive pricing while cutting costs.

 

 

 

Investment Summary:

PepsiCo’s portfolio contains 23 product brands and sells in more than 200 countries. Doritos, Mountain Dew, Tropicana, Lays, and Gatorade are only a few of PepsiCo’s popular Trademarks. Pepsico continues to be a growing company despite the current economic state. Shelf stable foods and beverages are in high demand due to COVID-19 as people stock up on groceries to self isolate, putting high pressure on the supply chain and manufacturing. Furthermore, their recent purchase of Rockstar gives them a wider range of beverages and a direct connection into the energy drink market. One of the biggest key driving factors of steady success for Pepsi is their brand. Their brand recognition is second to none and they have a very loyal consumer base. When it comes to brand quality resulting in sales Pepsi is at the top of the list. PepsiCo has a large operating income year by year and we expect this to remain the same. Another huge factor is their borrowing rate as of recent years has been relatively low which is a good indication of satisfying cash flow. This is a result of their large portfolio of products that can compete at a relative price point. The new acquisition of Rockstar and the increased popularity of energy drinks overall should result in an optimistic outcome for the company and we expect should pay dividends in the near future.   

 

Financial Analysis:

With our five year forecast we expect revenues to steadily increase slowly. Revenue from 2014 through 2019 has always stayed above $62 billion but we predict revenues reaching $70 billion and above. Total Assets numbers have only increased over the past 3 years and short and long term debt has decreased. This is a wonderful indication of the current state of PepsiCo. Pepsi is also facing pressure from their significant competitor of Coca Cola brand but this is nothing unusual for PepsiCo. Increases in sales/gross profit/and net income are slightly up but for such a mature company as PepsiCo this is at no surprise. PepsiCo is slightly better than industry average when it comes to debt-to-equity ratio meaning that cash still drives the business and they rely heavily on sales which have been steady.

     

 
 

Valuation:

We used three different valuation methods in which to support our position, P/E, P/S and EV/EBITIDA multiples. Using the average value for each method allowed us to calculate a good estimate for Pepsi in relation to comparable firms.  The marginally small increase within the past year for PepsiCo signals small but constant growth. PepsiCo can grow and expand as it acquires more brands and products and keeps up with customer demand. Incorporating each of the models allowed us to get a general sense of where the company is at currently and where it may be headed. Just as most mature long standing companies fluctuations to these models at times do not differentiate much. That is why it is best to get an average which can compare to the overall industry it presides in. The P/E multiple method was determined to be the best model that represents our forecast assuming that the market is pricing the stocks of other firms efficiently. P/E multiple method should provide a reasonable valuation while other methods are dependent on a larger set of assumptions which we tried to avoid. The Prices with methods used are looking static, and are not showing much growth, in situations like this we cannot predict profit for the future more accurately. We are assuming the profit will prevail in  future as well with very negligible growth rate as we can see from Common Size Statements the growth in earning is either negative or negligible , if we take average of last years it also come to negative  hence based on this, we can say it is better to hold it.

 

Investment Risks:

 

The carbonated beverage industry has in fact however taken a few hits in recent years due to the increased awareness of health implications. This is a factor to be cautious of when financing any beverage company of this nature. Society has a tendency to go with trends and when a company offers a product that is detrimental to health it always has risk of being unpopular. However, PepsiCo. has such a large consumer base and ones who are loyal to the brand to allow them to be successful today and for years to come. In a highly competitive industry, sales are mostly dependent on the purchasing power of consumers when the economy is impacted by an epidemic. Consumers will likely shift toward a firm that offers their needs at the cheapest prices. Failure to respond to changes in the economy exposes PepsiCo to risks like, losing its loyal customers and declining sales. This is particularly important to keep close watch on during these current times in our economy. Increased regulatory scrutiny and or legislation is another risk facing PepsiCo. A proposed soda tax aimed at curbing obesity could put increased pressure on the company. There are certain drinks that could be eligible for this additional tax depending on their sugar content. And mostly all PepsiCo beverages fall under this category.

FIN449
July 18, 2020
Group 2: Alya Al Haddabi, Gesselle Martinez, Jacob Goetzinger, Nicole Wong, Tommy Biesiadecki

Hanesbrands Inc. Analyst Report
Overview

We issue a BUY recommendation on Hanesbrand Inc. with a current stock price of $14.13 and a
target price of $24.4 with a plus or minus of approximately 10%. This was found with the
price-to-earnings ratio presenting a 73% increase. Hanesbrands focuses on innerwear and activewear
segments.Their global portfolio includes megabrands with strong heritage and deep household penetration
in their respective markets: ​Hanes is one of the world leaders in inner wear and in the upper position of
apparel brands in the United States market and is found in nine out of 10 U.S. households. ​Bonds is the
number one brand of underwear in Australia, and DIM is a mass leader in intimate apparel in France. We
expect Hanesbrands margin expansion because of their ability to quickly adapt due to the COVID-19
pandemic, continued increases in operating profits and earning ratios, and their persistent global
expansion while maintaining to deliver products based on consumer needs.

Investment Summary

On March 11, 2020 the World Health Organization declared a global pandemic that decreased
customer traffic in retail stores, changed consumers’ spending habits, and slowed down the U.S. and
global economies. 2020 will be negatively impacted but ​the company continues to generate sales through
channels of trade that have remained open during the pandemic, including online and mass retail.​ ​In
response to the pandemic​ ​Hanesbrand has quickly adapted to making over 320 million reusable fabric
face masks and more than 20 million medical gowns for the U.S. government and on track to deliver
more. Their swift change of production helped meet a critical product in need and kept thousands of
garment industry employees working and paid.

Hanes for Good, Hanesbrands corporate social responsibility program has significantly reduced
their environmental footprint. They earned a leadership level A for two consecutive years in the CDP
Climate Change Report and have been a U.S. Environmental Protection Agency Energy Star Sustained
Excellence Award winner for ten consecutive years. With a lot more people becoming more eco-friendly
in today’s climate they target brands accountable for what steps they’ve taken to be more sustainable.
Because Hanesbrands primarily operates its own manufacturing facilities and owns the majority of their
supply chain they have more direct control over their high standards. This is a huge plus for Hanes brand
and self manufacturing can control costs and increase efficiency. Approximately 80% of all apparel that is
sold by them is produced in plants they own or by contractors. Consumers’ knowledge of Hanesbrands
efforts for humanity will continue to make Hanesbrand a key producer in the textile business.

Hanesbrand stated that prior mid-March the U.S. innerwear segment sales and profits were
significantly better than expected and we suspect sales to increase after the global pandemic is over.
HanesBrands products are sold everywhere: company owned retail stores, mass merchandise, mid-tier,
department stores, college bookstores, dollar stores, as well as directly to consumers online. Champion
brand is one segment that is doing extraordinarily well for Hanes. They are currently focused on opening
200 Champion stores across Asia. Along with satisfying consumers’ needs the increasing popularity of
their Champion brand makes it a legitimate contender in athletic and fashion apparel.

FIN 449
July 18, 2020
Group 2: Alya Al Haddabi, Gesselle Martinez, Jacob Goetzinger, Nicole Wong, Tommy Biesiadecki

Financial Analysis

HanesBrands global footprint and in-house manufacturing are keys to its success. Net income has
steadily grown and 2019 was a good year seeing increases from $79 million in q1 to $188 million in q3.
International sales can be a major contributor here resulting in a year to year increase of 7% in
international growth. This growth has offset a lack of sales recently in the innerwear segment, reflecting a
tough environment right now. EPS and operating income have seen the most positive sides for
Hanesbrand. Both have increased substantially and we do not see this changing. A steady stream of sales
and operating profit are forecasted for Hanes in the upcoming years. Our sales growth projections take
into account the expansion of one part of the company and also the struggling side of the other with retail
stores performing poorly in this climate.
Valuation

The projected sales growth in 2021 is expected to drop from 2.5% to 1.6% because of reduced
needs for personal protective equipment and the decrease of consumer spending due to the economical
shock of the pandemic. However the increased popularity of the Champion brand and sales of inner wear
products there is no cause for concern for Hanes. We forecast that the expansion of Champion brand
stores in Asia will not happen immediately but will surely benefit the company immensely in the coming
years. We calculated a $24.4 value per share based on discounted equity cash flows model assuming an
unlevered cost of capital of 1.03% and terminal growth rate of 2.89%. We used different valuation
methods to support our stance. All include P/E, P/S, and EV/EBITIDA multiples. The increases over past
year are a strong sign in this current climate. The discounted free cash flows used the WACC percentage
of 7.10%, which involves the use of the market value of debt, something that the discounted equity cash
flow does not.
Investment Risks

Hanes must deal with the economic fallout of COVID-19, the crisis put many of its wholesale
partners at risk of downsizing or going out of business. The high volatility in the apparel market leads to
minimal brand loyalty. Competitors such as lifestyle brands, new clothing companies, and duplicated
products available at cheaper prices pose a serious threat to Hanesbrands. Due to the COVID-19
pandemic consumers’ spending can continue to be low and consumers may choose to purchase fewer of
Hanesbrands products or purchase lower-priced products of competitors. Fairly high amount of net debt
on the balance sheet for Hanes brand is also a risk. However it is only a risk if they are not able to pay off
the liabilities they are incurring. 2019 net debt was $3.81b so Hanes Brand is clearly relying on these
loans to further their ventures. Time will tell if this will help or hurt the bottom line. Another risk
ecommerce. With shares of the clothing manufacturer doubling off their March lows and regaining all the
ground lost due to the pandemic; its operations were just as much at risk as the competitions’ during the
pandemic because three-quarters of its revenue came from third-party retailers, most of which were forced
to close down. However, because it also sells to mass merchandisers like Walmart and Target, which
combined account for 25% of total revenue, and they were able to remain operational during the
pandemic, it was not completely shut off from retail sales. In fact, those two retailers were among the best
performers during the crisis.

RunningHead: MACY’S INC ANALYST REPORT 1

MACY’S INC ANALYST REPORT 3

Macy’s Inc Analyst Report

Overview

Macy’s Inc. has been struggling with debt issues for a while now. The high rate of debts has remained present and made it difficult for the balance sheet to look realistic. However, the measures in place aimed at minimizing liabilities in the coming years. In this light, the company has made official announcements of the expiration and provision of final results of the exchange. This is regarding some of the outstanding debt securities of Macy’s retail holding. Decreasing amounts of sales made by the company over the last months have fueled the disadvantages associated with debts the company is having.

Overview (~100-150 words)

•State your position (Buy, Sell, or Hold), the target price, and upside/downside percent.

•Identify the key reasons for your opinion – don’t overexplain, these will be covered below.

Investment Summary

Current earnings of Macy’s Inc projects that EV/EBIT ratio will be inversed. The data depicts that the firm is expected to gain returns of up to 10%, a move that will be unique in the history of the company. The competitive advantage that the company enjoys invests a relatively more straightforward task. Although the benefits are being weakened year in year out, they are still valid, and they can support any investment. The first one is the cost advantage. The company is focused on minimizing its expenditures. For example, they are closing some of its stores which are not earning enough profit. Brand value is another advantage that investors look at. Yes, the brand is declining each day. However, it is still strong in the industry.

•Investment Summary (~300-450 words)

•For each of your key reasons identified above, explain what is driving your assumptions about the future.

Financial Analysis

Macy’s Inc. stock price performance in the last five years show fluctuations in the trend they are taking. Despite this fact, the projection for the next five years is a steady increase. Looking at the financial information provided and comparing the company with other firms engaged in stores departments, it is evident that Macy’s Inc performance of the year 2020 is the worst. A similar conclusion can be made if the company performance can be compared with the averages of entire U.s companies.

•Financial Analysis (~200-300 words)

•Explain how your key reasons are driving your financial forecasts, particularly with regards to revenue, profitability, capital spending, working capital management and leverage.

Valuation

Different valuation approaches were utilized to support P/E, P/S and EV/EBITDA positions of the company. All the locations comprise of enough data, that if well calculated gives the right estimate of what is expected out of the company. The estimates reveal a constant growth if all issues are taken into consideration. Macy’s Inc can grow and expand as it acquires more brands of the products being sold. Presence of multiple position models helps in determining the best model, which can offer the right market estimates based on the known assumptions. The company assumes that with the decreasing debts, profits will prevail in future as the earnings are expected to grow. Taking all these into consideration, it can state categorically that gains in the coming years are set to go high.

•Valuation (~200-300 words)

•Identify the methodologies used which support your position and the resulting values.

•Discuss the inputs and outputs for each method you refer to, and how they connect to your overall value hypothesis.

Investment Risks

In the past years, Macy’s Inc has been a typical company that has been hitting the headlines about the profits the company is making. Uncertainty of the US business in recent years has made it difficult for investors to trust the business. These uncertainties have mitigated different investors into channeling their investments to organizations like Macy’s Inc. The high volatility and dynamic nature of the markets have made it difficult for brand loyalty to grow. People no longer trust Macy’s Inc products as they used to do. COVID-19 challenges have also been into the market. More resources have been channeled towards addressing the issues, leaving the business world open. Besides some products have been forced to be cheaper because few people are ordering them. All these are subjecting the company to risks of investments as returns are not guaranteed.

Investment Risks (~200-300 words)

•Explain what might make the price move differently than you predict, and how you accommodated this in your analysis.

Running Head: MACY’S INC ANALYST REPORT 1

MACY’S INC ANALYST REPORT 2

Overview

Macy’s Inc. has been struggling with debt issues for a while now. The high rate of debts has remained present and made it difficult for the balance sheet to look realistic. However, the measures in place aimed at minimizing liabilities in the coming years. In this light, the company has made official announcements of the expiration and provision of final results of the exchange. This is regarding some of the outstanding debt securities of Macy’s retail holding. Decreasing amounts of sales made by the company over the last months have fueled the disadvantages associated with debts the company is having.

Overview (~100-150 words)

•State your position (Buy, Sell, or Hold), the target price, and upside/downside percent.

•Identify the key reasons for your opinion – don’t overexplain, these will be covered below.

FOR EXAMPLE :

We issue a BUY recommendation on Hanesbrand Inc. with a current stock price of $14.13 and a target price of $24.4 with a plus or minus of approximately 10%. This was found with the price-to-earnings ratio presenting a 73% increase. Hanesbrands focuses on innerwear and activewear segments.Their global portfolio includes megabrands with strong heritage and deep household penetration in their respective markets: Hanes is one of the world leaders in inner wear and in the upper position of apparel brands in the United States market and is found in nine out of 10 U.S. households. Bonds is the number one brand of underwear in Australia, and DIM is a mass leader in intimate apparel in France. We expect Hanesbrands margin expansion because of their ability to quickly adapt due to the COVID-19 pandemic, continued increases in operating profits and earning ratios, and their persistent global expansion while maintaining to deliver products based on consumer needs.

Investment Summary

Current earnings of Macy’s Inc projects that EV/EBIT ratio will be inversed. The data depicts that the firm is expected to gain returns of up to 10%, a move that will be unique in the history of the company. The competitive advantage that the company enjoys invests a relatively more straightforward task. Although the benefits are being weakened year in year out, they are still valid, and they can support any investment. The first one is the cost advantage. The company is focused on minimizing its expenditures. For example, they are closing some of its stores which are not earning enough profit. Brand value is another advantage that investors look at. Yes, the brand is declining each day. However, it is still strong in the industry.

•Investment Summary (~300-450 words)

•For each of your key reasons identified above, explain what is driving your assumptions about the future.

FOR EXAMPLE:

On March 11, 2020 the World Health Organization declared a global pandemic that decreased customer traffic in retail stores, changed consumers’ spending habits, and slowed down the U.S. and global economies. 2020 will be negatively impacted but the company continues to generate sales through channels of trade that have remained open during the pandemic, including online and mass retail. In response to the pandemic Hanesbrand has quickly adapted to making over 320 million reusable fabric face masks and more than 20 million medical gowns for the U.S. government and on track to deliver more. Their swift change of production helped meet a critical product in need and kept thousands of garment industry employees working and paid.

Hanes for Good, Hanesbrands corporate social responsibility program has significantly reduced their environmental footprint. They earned a leadership level A for two consecutive years in the CDP Climate Change Report and have been a U.S. Environmental Protection Agency Energy Star Sustained Excellence Award winner for ten consecutive years. With a lot more people becoming more eco-friendly in today’s climate they target brands accountable for what steps they’ve taken to be more sustainable. Because Hanesbrands primarily operates its own manufacturing facilities and owns the majority of their supply chain they have more direct control over their high standards. This is a huge plus for Hanes brand and self manufacturing can control costs and increase efficiency. Approximately 80% of all apparel that is sold by them is produced in plants they own or by contractors. Consumers’ knowledge of Hanesbrands efforts for humanity will continue to make Hanesbrand a key producer in the textile business.

Hanesbrand stated that prior mid-March the U.S. innerwear segment sales and profits were significantly better than expected and we suspect sales to increase after the global pandemic is over. HanesBrands products are sold everywhere: company owned retail stores, mass merchandise, mid-tier, department stores, college bookstores, dollar stores, as well as directly to consumers online. Champion brand is one segment that is doing extraordinarily well for Hanes. They are currently focused on opening 200 Champion stores across Asia. Along with satisfying consumers’ needs the increasing popularity of their Champion brand makes it a legitimate contender in athletic and fashion apparel.

Financial Analysis

Macy’s Inc. stock price performance in the last five years show fluctuations in the trend they are taking. Despite this fact, the projection for the next five years is a steady increase. Looking at the financial information provided and comparing the company with other firms engaged in stores departments, it is evident that Macy’s Inc performance of the year 2020 is the worst. A similar conclusion can be made if the company performance can be compared with the averages of entire U.s companies.

•Financial Analysis (~200-300 words)

•Explain how your key reasons are driving your financial forecasts, particularly with regards to revenue, profitability, capital spending, working capital management and leverage.

FOR EXAMPLE:

HanesBrands global footprint and in-house manufacturing are keys to its success. Net income has steadily grown and 2019 was a good year seeing increases from $79 million in q1 to $188 million in q3. International sales can be a major contributor here resulting in a year to year increase of 7% in international growth. This growth has offset a lack of sales recently in the innerwear segment, reflecting a tough environment right now. EPS and operating income have seen the most positive sides for Hanesbrand. Both have increased substantially and we do not see this changing. A steady stream of sales and operating profit are forecasted for Hanes in the upcoming years. Our sales growth projections take into account the expansion of one part of the company and also the struggling side of the other with retail stores performing poorly in this climate.

Valuation

Different valuation approaches were utilized to support P/E, P/S and EV/EBITDA positions of the company. All the locations comprise of enough data, that if well calculated gives the right estimate of what is expected out of the company. The estimates reveal a constant growth if all issues are taken into consideration. Macy’s Inc can grow and expand as it acquires more brands of the products being sold. Presence of multiple position models helps in determining the best model, which can offer the right market estimates based on the known assumptions. The company assumes that with the decreasing debts, profits will prevail in future as the earnings are expected to grow. Taking all these into consideration, it can state categorically that gains in the coming years are set to go high.

•Valuation (~200-300 words)

•Identify the methodologies used which support your position and the resulting values.

•Discuss the inputs and outputs for each method you refer to, and how they connect to your overall value hypothesis.

FOR EXAMPLE:

The projected sales growth in 2021 is expected to drop from 2.5% to 1.6% because of reduced needs for personal protective equipment and the decrease of consumer spending due to the economical shock of the pandemic. However the increased popularity of the Champion brand and sales of inner wear products there is no cause for concern for Hanes. We forecast that the expansion of Champion brand stores in Asia will not happen immediately but will surely benefit the company immensely in the coming years. We calculated a $24.4 value per share based on discounted equity cash flows model assuming an unlevered cost of capital of 1.03% and terminal growth rate of 2.89%. We used different valuation methods to support our stance. All include P/E, P/S, and EV/EBITIDA multiples. The increases over past year are a strong sign in this current climate. The discounted free cash flows used the WACC percentage of 7.10%, which involves the use of the market value of debt, something that the discounted equity cash flow does not.

Investment Risks

In the past years, Macy’s Inc has been a typical company that has been hitting the headlines about the profits the company is making. Uncertainty of the US business in recent years has made it difficult for investors to trust the business. These uncertainties have mitigated different investors into channeling their investments to organizations like Macy’s Inc. The high volatility and dynamic nature of the markets have made it difficult for brand loyalty to grow. People no longer trust Macy’s Inc products as they used to do. COVID-19 challenges have also been into the market. More resources have been channeled towards addressing the issues, leaving the business world open. Besides some products have been forced to be cheaper because few people are ordering them. All these are subjecting the company to risks of investments as returns are not guaranteed.

Investment Risks (~200-300 words)

•Explain what might make the price move differently than you predict, and how you accommodated this in your analysis.

FOR EXAMPLE :

Hanes must deal with the economic fallout of COVID-19, the crisis put many of its wholesale partners at risk of downsizing or going out of business. The high volatility in the apparel market leads to minimal brand loyalty. Competitors such as lifestyle brands, new clothing companies, and duplicated products available at cheaper prices pose a serious threat to Hanesbrands. Due to the COVID-19 pandemic consumers’ spending can continue to be low and consumers may choose to purchase fewer of Hanesbrands products or purchase lower-priced products of competitors. Fairly high amount of net debt on the balance sheet for Hanes brand is also a risk. However it is only a risk if they are not able to pay off the liabilities they are incurring. 2019 net debt was $3.81b so Hanes Brand is clearly relying on these loans to further their ventures. Time will tell if this will help or hurt the bottom line. Another risk ecommerce. With shares of the clothing manufacturer doubling off their March lows and regaining all the ground lost due to the pandemic; its operations were just as much at risk as the competitions’ during the pandemic because three-quarters of its revenue came from third-party retailers, most of which were forced to close down. However, because it also sells to mass merchandisers like Walmart and Target, which combined account for 25% of total revenue, and they were able to remain operational during the pandemic, it was not completely shut off from retail sales. In fact, those two retailers were among the best performers during the crisis.