STOCK EVALUATION Assignment Example | Topics and Well Written Essays - 1500 words

STOCK EVALUATION - Assignment Example The company’s stocks are traded at New York Stock Exchange and it also forms one of the companies in Dow Jones Industrial Average, and the S&P 500. The company’s total revenue for the year 2011 was over USD 67.41 billon with a net operating income and net income of USD 12.75 billion and USD 11 billion respectively. Its total asset and equity for the year 2011 was USD 189 billion and USD 81.19 billion respectively. Between the year 2000 and 2011, the company has regularly paid dividends to its shareholders, quarterly, with Average dividend of 0.19, Maximum dividend of 0.32, and Minimum dividend of 0.09. Economic Analysis The State of Overall Economy The economic analysis of a business comprises of analyzing not only the fundamentals of the business, but the overall Macro-economic as well as Micro-economic factors. It is also known as the top down approach because a stock analyst observes the macro and micro economic variable like, GDP, inflation rate, Repo rates, Interes t rates, consumer spending, various indices, political and economic stability, government policies, competitors, industry performance, etc. to judge the overall state of business, by analyzing first the Macro factors and then the micro factors – industry and competitors and then the company. ... It has direct impact on the consumer borrowing and lending. So, the lower rates encourages more borrowing and consequently creating more jobs and leading to economic growth. Consumer spending – It depends on the fiscal budget prepared by the government every year. The budget allocated to each sector of economy determines the retail prices, which is higher than wholesale prices. Thus, consumers will be encouraged to spend more when retail prices for the goods and services are lower. Higher spending will create more demand and more jobs that will expand the growth of economy and increase the GDP. Inflation – It is condition when the overall prices goods and services increases due to various reasons including demand-supply mismatch, increased government spending, etc. High inflation rates reduce the real value of money and hence low inflation rates are favorable for economic prosperity. Industry Analysis Nature of Industry The nature of the pharmaceutical industry is that this industry develops or produces and markets generic or branded drugs with the license for the use in various medicines. The most important part of this industry is the Drug License Authority that clears drug licenses of the companies belonging to the industry and the drug patenting. The regulations regarding testing, efficiency, patents, marketing of drugs is guided by the Food and Drug Administration in the United States. Major Competitors Some of the major players in the industry are GlaxoSmithKline, Pfizer, Abbott Laboratories, and Eli Lilly. According to a study conducted in 2008, Pfizer topped the list of pharmaceutical companies all over the world and emerged as the market leader. It was followed by Novartis from Switzerland and