Final Case Analysis;

Final Case Analysis;
Your mission is to perform a comprehensive, comparative, and real-time financial analysis for United Parcel Service, Inc. (UPS) vs. FedEx (FDX), including strategy and financial analyses, sales and EPS forecasting, valuation, and accounting analysis, as of the date of your report. Your report should focus on UPS and contain the following:
1. An executive summary (one page), highlighting your key findings, followed by a main report described below.

2. The main report, typed, double or 1&1/2-spaced, not exceeding 10 pages, and featuring the following components (need not be in the same order):

1) Business Strategy Analysis (don?t overdo this) including

 Analysis of key features of the firm?s business, its strategy and the risks and rewards of its future directions and the growth strategies. You can perform a SWOT analysis if necessary.

 A useful analysis typically relates business strategy to financial analysis, especially, analysis of profitability and efficiency.

2) Financial Analysis

 Assessment of past and current conditions, supported by a ratio analysis.

 This should include an in-depth analysis of operating performance of past (pertinent) years and discussions of how past conditions shape your forecasts of short-term and long term financial conditions (including long term growth outlook) to be used for enterprise valuation.

3) Prospective Analysis including

 Sales and EPS forecasts for 1st Quarter of FY2016 (ends March 31,2016). The EPS definition should be consistent with that of the Street.

 Projected annual financials for at least over the next 10 years.

 Equity valuation using both FCF and Residual Income methods. This is an important part of your report. Please describe how you obtained Sales and EPS forecasts, Projected financials, and Valuation.

4) Accounting Analysis including your views on

 Quality of financial reporting (not only Annual Report/10K but also press releases, if applicable).

 Whether there are potentially troubling accounting issues.

 Overall assessment of the soundness of accounting policies, and of whether the firm?s accounting policies are aggressive (tendency to overstate income), conservative (tendency to understate income), or just right.

5) In ? or 1 page, provide your

 Advice to laymen, pointing out potential risks and rewards of holding UPS stocks, and investment recommendations (buy or sell) for the short-term (3 to 6 months, or whatever is your definition of short term) and for the long term (1 to 3 years).

3. Appendices (if needed, in addition to the 10-page report), which provide the details of your analysis (e.g., equity valuations, forecasting, ratios). These should help readers understand how you obtained your forecasts and valuations.

OTHER INFORMATION AND INSTRUCTIONS

1. The following files will be posted to the blackboard.

 FinalCaseUPS.pdf (a pdf file of this document).

 MS Excel file (UPS.xls) containing annual and quarterly financial data of UPS and its competitor FDX.

 Most recent 10K Annual report of UPS and FDX

 Most recent quarterly earnings announcement of UPS.

Note: The financial data in UPS.xls are taken from a number of different sources, so they may contain unintentional errors or inconsistencies. It is your responsibility to reconcile the differences or to correct errors, if necessary.

2. Since this is a real-time analysis, you are responsible for updating or checking the date or obtaining other information on your own, if needed. This does not mean that you can copy other people?s analyses and opinions. Your report should reflect your own views. Do not copy or include worksheets or reports (e.g. ratios) that someone else made, except for certain items (e.g., stock price charts) that may be necessary for you to illustrate your point.

You may also find the following sites useful

1. http://finance.yahoo.com or similar financial websites.

2. The firm?s own website, e.g., http://www.investors.ups.com/phoenix.zhtml?c=62900&p=irol-irhome

3. The case may be written up individually or by a group of three or fewer students.

You can form a group with students in a different section.

4. Note on cheating: your report should not bear any resemblance to other student?s paper, analyst reports, or published research reports ? if so, it will be considered as cheating.

CAVEATS

1. It is time-consuming to do this case, so start early. The most challenging part is to distill the analysis into a solid paper that comes under 10 pages. Notice that writing and editing take time. Remember that this is an open-ended, real-time exercise, for which there is no right ?answer? or ?how-to-do.? (Don?t give me a question that starts with ?Should I?. or Can I??)

2. A simplistic extrapolation of the tools and methodologies we learned in class is not likely to produce an above-average paper. An above-average analysis requires an ability to adapt to specific circumstances and to extend what we learned in class.

3. Your paper will be graded based on i) presentation (how well you explain your analysis and support your findings: 30%), ii) content (depth and soundness of the analyses: 50%), and iii) soundness and accuracy of your sales and EPS forecasts (20%). I am interested in your thoughts, not those of others, or so-called experts (e.g., Morgan Stanley analysts).
The source is any,not zero.
Thanks a lot.