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29 Apr Once you conclude your analysis, if you find that the stock is overvalued, you will not recommend the investment. ?Conversely, ?if ?you ?f

Posted at 07:56h in Business & Finance by

 Once you conclude your analysis, if you find that the stock is overvalued, you will not recommend the
investment.  Conversely,  if  you  find  that  the  stock  is  undervalued,  you  will  provide  a  positive
recommendation.  

You should base your analysis on the two methods you are most acquainted with (DDM, PE).
 

 - You should include a qualitative analysis where you detail the reasons supporting your chosen
“super-normal growth rate”. You should also justify your chosen time-horizon of this “super-
normal  growth” stage of the  business  cycle  of the  firm  (how  long  the  firm  will grow  at  this
super normal rate before using the long term growth rate)

– The  qualitative  analysis  must  be  at  least  2  pages  (single-spaced  and  typed),  you  should
comment on all of the parameters in the Excel sheet “Assumptions”.   

IS

NIKE Inc (NYS: NKE)
Exchange rate used is that of the Year End reported date
(in thousands except per share values)
1 2 3 4 5 6 7 8 9 10 11
As Reported Annual Income Statement 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Revenues 14,954,900 16,325,900 18,627,000 19,176,100 19,014,000 20,862,000 24,128,000 25,313,000 27,799,000 30,601,000
Cost of sales 8,367,900 9,165,400 10,239,600 10,571,700 10,213,600 11,354,000 13,657,000 14,279,000 15,353,000 16,534,000
Gross profit 6,587,000 7,160,500 8,387,400 8,604,400 8,800,400 9,508,000 10,471,000 11,034,000 12,446,000 14,067,000
Demand creation expense – – – – – 2,448,000 2,711,000 2,745,000 3,031,000 3,213,000
Operating overhead expense – – – – – 4,245,000 4,720,000 5,035,000 5,735,000 6,679,000
Total selling & administrative expense 4,477,800 5,028,700 5,953,700 6,149,600 6,326,400 6,693,000 7,431,000 7,780,000 8,766,000 9,892,000
Restructuring charges – – – 195,000 – – – – – –
Goodwill impairment – – – 199,300 – – – – – –
Intangible & other asset impairment – – – 202,000 – – – – – –
Interest income (expense), net 36,800 67,200 77,100 9,500 (6,300) (4,000) (3,000) 3,000 (33,000) (28,000)
Other expense (income), net 4,400 (900) 7,900 (88,500) (49,200) (33,000) 54,000 (15,000) 103,000 (58,000)
Income (loss) before income taxes – United States 838,600 805,100 713,000 845,700 698,600 1,084,000 792,000 1,240,000 3,066,000 1,967,000
Income (loss) before income taxes – foreign 1,303,000 1,394,800 1,789,900 1,110,800 1,818,300 1,760,000 2,191,000 2,032,000 478,000 2,238,000
Income (loss) before income taxes 2,141,600 2,199,900 2,502,900 1,956,500 2,516,900 2,844,000 2,983,000 3,272,000 3,544,000 4,205,000
Current provision (benefit) for income taxes – federal 359,000 352,600 469,900 410,100 200,200 289,000 274,000 434,000 371,000 596,000
Current provision (benefit) for income taxes – state 60,600 59,600 58,400 46,100 50,000 57,000 51,000 69,000 93,000 80,000
Current provision (benefit) for income taxes – foreign 356,000 261,900 391,800 307,700 348,500 441,000 495,000 398,000 398,000 369,000
Total current provision (benefit) for income taxes 775,600 674,100 920,100 763,900 598,700 787,000 820,000 901,000 862,000 1,045,000
Deferred provision (benefit) for income taxes – federal (4,200) 38,700 (273,000) (251,400) 17,700 (61,000) (54,000) 1,000 8,000 (66,000)
Deferred provision (benefit) for income taxes – state (6,800) (4,800) (5,000) (7,900) (1,100) – 4,000 (4,000) (3,000) (11,000)
Deferred provision (benefit) for income tax – foreign (15,000) 400 (22,600) (34,800) (5,100) (15,000) (10,000) (90,000) (16,000) (36,000)
Total deferred provision (benefit) for income taxes (26,000) 34,300 (300,600) (294,100) 11,500 (76,000) (60,000) (93,000) (11,000) (113,000)
Income tax expense (benefit) 749,600 708,400 619,500 469,800 610,200 711,000 760,000 808,000 851,000 932,000
Net income from continuing operations ` – – – – – – 2,464,000 2,693,000 3,273,000
Income (loss) from discontinued operations – – – – – – – 21,000 – –
Net income (loss) 1,392,000 1,491,500 1,883,400 1,486,700 1,906,700 2,133,000 2,223,000 2,485,000 2,693,000 3,273,000
Weighted average shares outstanding – basic 1,036,000 1,007,600 991,200 969,800 971,000 951,000 920,000 897,300 883,400 861,700
Weighted average shares outstanding – diluted 1,055,200 1,019,800 1,008,200 981,400 987,800 971,400 939,600 916,400 905,800 884,400
Year end shares outstanding 1,024,000 1,003,400 982,200 971,000 968,000 936,000 916,000 894,000 870,000 857,000
Income (loss) per common share – continuing operations – basic 1 – – – – – – 3 3 4
Income (loss) per share – discontinued operations – basic – – – – – – – 0 – –
Net income (loss) per common share – basic 1 1 2 2 2 2 2 3 3 4
Income (loss) per common share – continuing operations – diluted 1 – – – – – – 3 3 4
Income (loss) per share – discontinued operations – diluted – – – – – – – 0 – –
Net income (loss) per common share – diluted 1 1 2 2 2 2 2 3 3 4
Dividends declared per common share 0 0 0 0 1 1 1 1 1 1
Total number of employees 28,000 30,200 32,500 34,300 34,400 38,000 44,000 48,000 56,500 62,600
Class A common stockholders 18 23 21 16 19 19 18 19 21 20
Class B common stockholders 19,348 19,621 16,542 20,672 20,452 16,400 19,740 30,586 32,758 23,347
Number of stockholders 19,366 19,644 – – – – – – – –
Foreign currency translation adjustments – – – – – – – – – (20,000)

BS

NIKE Inc (NYS: NKE)
Indicates accounts that comprise Capital
Exchange rate used is that of the Year End reported date
(in thousands except per share values)
1 2 3 4 5 6 7 8 9 10 11
As Reported Annual Balance Sheet 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Cash & equivalents 954,200 1,856,700 2,133,900 2,291,100 3,079,100 1,955,000 2,317,000 3,337,000 2,220,000 3,852,000
Short-term investments 1,348,800 990,300 642,200 1,164,000 2,066,800 2,583,000 1,440,000 2,628,000 2,922,000 2,072,000
Accounts receivable, gross 2,463,500 2,566,200 2,873,700 2,994,700 2,766,500 3,262,000 3,375,000 3,221,000 3,512,000 3,436,000
Less: allowance for uncollectible accounts receivable 67,600 71,500 78,400 110,800 116,700 124,000 95,000 104,000 78,000 78,000
Accounts receivable, net 2,395,900 2,494,700 2,795,300 2,883,900 2,649,800 3,138,000 3,280,000 3,117,000 3,434,000 3,358,000
Finished goods – 2,121,900 2,438,400 2,357,000 2,040,800 2,715,000 3,350,000 3,434,000 3,947,000 4,337,000
Inventories 2,076,700 2,121,900 2,438,400 2,357,000 2,040,800 2,715,000 3,350,000 3,434,000 3,947,000 4,337,000
Deferred income taxes 203,300 219,700 227,200 272,400 248,800 312,000 274,000 308,000 355,000 389,000
Prepaid expenses & other current assets 380,100 393,200 602,300 765,600 873,900 594,000 870,000 802,000 818,000 1,968,000
Total current assets 7,359,000 8,076,500 8,839,300 9,734,000 10,959,200 11,297,000 11,531,000 13,626,000 13,696,000 15,976,000
Land 195,900 193,800 209,400 221,600 222,800 237,000 252,000 268,000 270,000 273,000
Buildings 842,600 840,900 934,600 974,000 951,900 1,124,000 1,158,000 1,174,000 1,261,000 1,250,000
Machinery & equipment 1,661,700 1,817,200 2,005,000 2,094,300 2,217,500 2,487,000 – – – –
Machinery, equipment & internal-use software – – – – – – 2,755,000 2,985,000 3,376,000 3,329,000
Leasehold improvements 626,700 672,800 757,300 802,000 820,600 931,000 968,000 945,000 1,066,000 1,150,000
Construction in process 81,400 94,400 196,700 163,800 177,000 127,000 111,000 128,000 247,000 350,000
Total property, plant & equipment, gross 3,408,300 3,619,100 4,103,000 4,255,700 4,389,800 4,906,000 5,244,000 5,500,000 6,220,000 6,352,000
Less: accumulated depreciation 1,750,600 1,940,800 2,211,900 2,298,000 2,457,900 2,791,000 2,965,000 3,048,000 3,386,000 3,341,000
Property, plant & equipment, net 1,657,700 1,678,300 1,891,100 1,957,700 1,931,900 2,115,000 2,279,000 2,452,000 2,834,000 3,011,000
Identifiable intangible assets, net 405,500 409,900 743,100 467,400 467,000 487,000 535,000 382,000 282,000 281,000
Goodwill 130,800 130,800 448,800 193,500 187,600 205,000 201,000 131,000 131,000 131,000
Deferred income taxes & other assets 316,600 392,800 520,400 897,000 873,600 894,000 919,000 993,000 1,651,000 2,201,000
Total assets 9,869,600 10,688,300 12,442,700 13,249,600 14,419,300 14,998,000 15,465,000 17,584,000 18,594,000 21,600,000
Current portion of long-term debt 255,300 30,500 6,300 32,000 7,400 200,000 49,000 57,000 7,000 107,000
Notes payable 43,400 100,800 177,700 342,900 138,600 187,000 108,000 121,000 167,000 74,000
Accounts payable 952,200 1,040,300 1,287,600 1,031,900 1,254,500 1,469,000 1,588,000 1,646,000 1,930,000 2,131,000
Accrued compensation & benefits, excluding taxes 427,200 451,600 538,000 491,900 598,800 628,000 711,000 713,000 782,000 997,000
Accrual collateral received from counterparties to hedging instruments – – – – – – – – – 968,000
Accrued endorsement compensation 124,700 139,900 203,500 237,100 266,900 284,000 294,000 264,000 328,000 388,000
Accrued dividends payable 79,500 92,900 112,900 121,400 130,700 145,000 165,000 188,000 209,000 240,000
Accrued import & logistics costs – 81,400 78,800 59,400 80,000 98,000 133,000 111,000 127,000 207,000
Accrud taxes other than income taxes 115,100 133,400 147,600 161,900 157,900 214,000 179,000 192,000 204,000 174,000
Accrued fair value of derivatives 111,200 90,500 173,300 68,900 163,600 186,000 55,000 34,000 85,000 162,000
Accrued advertising & marketing 75,400 70,600 121,400 97,600 124,900 139,000 132,000 77,000 133,000 117,000
Accrued restructuring charges – – – 149,600 8,200 – – – – –
Converse arbitration 51,900 – – – – – – – – –
Other accrued liabilities 301,900 243,100 386,400 396,100 373,400 291,000 384,000 407,000 623,000 698,000
Accrued liabilities 1,286,900 1,303,400 1,761,900 1,783,900 1,904,400 1,985,000 2,053,000 1,986,000 2,491,000 3,951,000
Income taxes payable 85,500 109,000 88,000 86,300 59,300 117,000 67,000 98,000 432,000 71,000
Liabilities of discontinued operations – – – – – – – 18,000 – –
Total current liabilities 2,623,300 2,584,000 3,321,500 3,277,000 3,364,200 3,958,000 3,865,000 3,926,000 5,027,000 6,334,000
Corporate bond payables 485,800 238,800 221,500 229,800 205,500 206,000 205,000 1,159,000 1,106,000 1,099,000
Promissory notes – – – – – – – 59,000 58,000 58,000
Japanese Yen notes 180,100 201,600 225,900 239,400 247,700 270,000 72,000 49,000 42,000 29,000
Other long-term debt 100 – – – – – – – – –
Total long-term debt 666,000 440,400 447,400 469,200 453,200 476,000 277,000 1,267,000 1,206,000 1,186,000
Less: current maturities 255,300 30,500 6,300 32,000 7,400 200,000 49,000 57,000 7,000 107,000
Long-term debt 410,700 409,900 441,100 437,200 445,800 276,000 228,000 1,210,000 1,199,000 1,079,000
Deferred income taxes & other liabilities 550,100 668,700 854,500 842,000 855,300 921,000 991,000 1,292,000 1,544,000 1,480,000
Redeemable preferred stock 300 300 300 300 300 – – – – –
Class A convertible common stock 100 100 100 100 100 – – – – –
Class B common stock 2,700 2,700 2,700 2,700 2,700 3,000 3,000 3,000 3,000 3,000
Capital in excess of stated value 1,451,400 1,960,000 2,497,800 2,871,400 3,440,600 3,944,000 4,641,000 5,184,000 5,865,000 6,773,000
Unearned stock compensation 4,100 – – – – – – – – –
Foreign currency translation adjustment – – – – – – – – 9,000 (11,000)
Cumulative translation adjustment & other comprehensive income (loss) 161,900 234,300 356,400 64,600 (94,600) 168,000 (127,000) (14,000) – –
Cash flow hedges (40,200) (56,900) (105,000) 240,400 202,100 (123,000) 181,000 193,000 32,000 1,220,000
Net investment hedges – – – 62,500 107,300 50,000 95,000 95,000 95,000 95,000
Other accumulated other comprehensive income – – – – – – – – (51,000) (58,000)
Accumulated other comprehensive income (loss) 121,700 177,400 251,400 367,500 214,800 95,000 149,000 274,000 85,000 1,246,000
Retained earnings 4,713,400 4,885,200 5,073,300 5,451,400 6,095,500 5,801,000 5,588,000 5,695,000 4,871,000 4,685,000
Total shareholders' equity 6,285,200 7,025,400 7,825,300 8,693,100 9,753,700 9,843,000 10,381,000 11,156,000 10,824,000 12,707,000

SCFs

NIKE Inc (NYS: NKE)
Exchange rate used is that of the Year End reported date
(in thousands except per share values)
As Reported Annual Cash Flow 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Net income (loss) 1,392,000 1,491,500 1,883,400 1,486,700 1,906,700 2,133,000 2,223,000 2,485,000 2,693,000 3,273,000
Depreciation 282,000 269,700 303,600 335,000 323,700 335,000 373,000 438,000 518,000 606,000
Deferred income taxes (26,000) 34,100 (300,600) (294,100) 8,300 (76,000) (60,000) 21,000 (11,000) (113,000)
Stock-based compensation – 147,700 141,000 170,600 159,000 105,000 130,000 174,000 177,000 191,000
Impairment of goodwill, intangibles & other assets – – – 401,300 – – – – – –
Amortization & other – – – – – – – – – 43,000
Net foreign currency adjustments – – – – – – – – – 424,000
Amortization & other income charges (credits) not affecting cash 8,900 500 17,900 48,300 71,800 23,000 32,000 75,000 114,000 –
Net loss (gain) on divestitures – – (60,600) – – – – (124,000) – –
Income tax benefit from exercise of stock options 54,200 – – – – – – – – –
Accounts receivable (85,100) (39,600) (118,300) (238,000) 181,700 (273,000) (323,000) 142,000 (298,000) (216,000)
Inventories (200,300) (49,500) (249,800) 32,200 284,600 (551,000) (805,000) (197,000) (505,000) (621,000)
Prepaid expenses & other current assets (37,200) (60,800) (11,200) 14,100 (69,600) (35,000) (141,000) (28,000) (210,000) (144,000)
Accounts payable, accrued liabilities & income taxes payable 279,400 85,100 330,900 (220,000) 298,000 151,000 470,000 41,000 525,000 1,237,000
Net cash flows from operating activities 1,667,900 1,878,700 1,936,300 1,736,100 3,164,200 1,812,000 1,899,000 3,027,000 3,003,000 4,680,000
Purchases of short-term investments (2,619,700) (2,133,800) (1,865,600) (2,908,700) (3,724,400) (7,616,000) (2,705,000) (3,702,000) (5,386,000) (4,936,000)
Maturities of short-term investments 1,709,800 2,516,200 2,246,000 2,390,000 2,787,600 4,313,000 2,585,000 1,501,000 3,932,000 3,655,000
Sales of short-term investments – – – – – 2,766,000 1,244,000 998,000 1,126,000 2,216,000
Investments in reverse repurchase agreements – – – – – – – – – (150,000)
Additions to property, plant & equipment (333,700) (313,500) (449,200) (455,700) (335,100) (432,000) (597,000) (636,000) (880,000) (963,000)
Disposals of property, plant & equipment 1,600 28,300 1,900 32,000 10,100 1,000 2,000 14,000 3,000 3,000
Proceeds from divestitures – – 246,000 – – – – 786,000 – –
Increase in other assets, net of other liablities (30,300) (4,300) (21,800) (47,000) (11,200) (30,000) (37,000) (28,000) (2,000) –
Settlement of net investment hedges – – – 191,300 5,500 (23,000) 22,000 – – –
Acquisition of subsidiary, net assets acquired – – (571,100) – – – – – – –
Increase (decrease) in other liabilities (4,300) – – – – – – – – –
Net cash flows from investing activities (1,276,600) 92,900 (413,800) (798,100) (1,267,500) (1,021,000) 514,000 (1,067,000) (1,207,000) (175,000)
Net proceeds from long-term debt issuance – 41,800 – – – – – 986,000 – –
Long-term debt payments, including current portion (6,000) (255,700) (35,200) (6,800) (32,200) (8,000) (203,000) (49,000) (60,000) (7,000)
Increase (decrease) in notes payable (18,200) 52,600 63,700 177,100 (205,400) 41,000 (65,000) 15,000 75,000 (63,000)
Payments on capital lease obligations – – – – – – – – (17,000) (19,000)
Proceeds from exercise of stock options & other stock issuances 225,300 322,900 343,300 186,600 364,500 345,000 468,000 313,000 383,000 514,000
Excess tax benefits from share-based payment arrangements – 55,800 63,000 25,100 58,500 64,000 115,000 72,000 132,000 218,000
Issuance (repurchase) of common stock (761,100) (985,200) (1,248,000) (649,200) (741,200) (1,859,000) (1,814,000) (1,674,000) (2,628,000) (2,534,000)
Dividends – common & preferred (290,900) (343,700) (412,900) (466,700) (505,400) (555,000) (619,000) (703,000) (799,000) (899,000)
Net cash flows from financing activities (850,900) (1,111,500) (1,226,100) (733,900) (1,061,200) (1,972,000) (2,118,000) (1,040,000) (2,914,000) (2,790,000)
Effect of exchange rate changes on cash & equivalents 25,700 42,400 (19,200) (46,900) (47,500) 57,000 67,000 100,000 1,000 (83,000)
Net increase (decrease) in cash & equivalents (433,900) 902,500 277,200 157,200 788,000 (1,124,000) 362,000 1,020,000 (1,117,000) 1,632,000
Cash & equivalents, beginning of year 1,388,100 954,200 1,856,700 2,133,900 2,291,100 3,079,000 1,955,000 2,317,000 3,337,000 2,220,000
Cash & equivalents, end of year 954,200 1,856,700 2,133,900 2,291,100 3,079,100 1,955,000 2,317,000 3,337,000 2,220,000 3,852,000
Cash paid during the year for interest, net of capitalized interest 54,200 60,000 44,100 46,700 48,400 32,000 29,000 20,000 53,00

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