- Prepare an analysis of Enterprise Value (and the EV/EBITDA ratio). Report the results of both analyses and explain what they mean.
- Based on all of the indicators, is the stock of the company overvalued or undervalued?
FINC440 Instructions & Recommendations
Technical Analysis and Enterprise Value Ratios:
The purpose of this note is to carefully explain the general expectations and requirements for the Technical Analysis and Enterprise Value Ratios Valuation Assignment that is to be prepared for FINC 440. The information and materials presented here are intended to make sure that you clearly understand the general expectations and that there are no misunderstandings about what is to be done and what is expected.
Please review this material so that you are familiar with the specific requirements that are being followed in the preparation and submission of the Assignment.
- Using at least 6 commonly used indicators, conduct a Technical Analysis of the common stock of the company that you selected to study. Explain the purpose and how to interpret each of the indicators.
Then, explain what each of the indicators suggests about the value of the company’s stock now and in the future.
Required Outline & Other Information about the Assignments –
- Avoid Personal Pronouns
– The excessive use of personal pronouns is discouraged in business and analytical writing. It is recommended that personal pronouns are avoided altogether, if possible. Please make sure that personal pronouns (e.g., I, we, my, our, etc.) are avoided on the paper. It will take some work, but it can be done easily by rearranging the wording of sentences.
- Companies Are Not “They,” “Their,” or “Them”
– This is a reminder that a company is not a “they,” “their,” or “them.” A company is very much an “it.” So, to reference a company, use “it,” the name of the company, or “the company,” or “the organization,” or “the firm,” etc.
- Outline for Paper
–Students must use the required outline for this assignment. The closer that the paper conforms to the required outline, the better! The outline is presented in the next section.
- Evaluation Rubric
– An evaluation rubric is available for the Assignments. It will be used to evaluate the Assignments. The rubric shows the important components that must be included in the papers. It is a good idea to take a look at the rubric and make sure that each Assignment addresses the requirements. A copy is posted with each Assignment in the online classroom.
– Each section of the paper must begin with a sub-heading. Please use the sub-headings included in the required outline (presented in the next section).
Required Outline (It must be used for each Assignment) –
The following outline is to be used for each Assignment; these titles are the required subheadings for the sections of the written report:
- Cover Page
– Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date.
– The Introduction must include:
(a) A review of the Assignment purpose, research methods and the principal information sources, and other information related to the completion of the analysis.
(b) The introduction should also include an overview of the sections of the paper that follow. (1/2 to 1 page)
- Analysis Section
– The body of the report is to address the assigned topics and questions.
It is essential that students include appropriate in-text reference citations in APA format:
- Summary / Conclusion
– The summary or conclusion should review the major observations, conclusions, and recommendations developed in the analysis. No new material should be introduced in this section. (1/2 to 1 page)
– Provide a list of references in the 7th Edition of the APA format.
Damodaran, Aswath. Support website for “The Little Book of Valuation.” Available online at: http://pages.stern.nyu.edu/~adamodar/New_Home_Page/littlebook.htm
Online Powerpoint Instruction & Other Supplements for:
Damodaran, Aswath. Investment Valuation (3rd ed.). John Wiley & Sons, Inc.
Available online at:
Chapter 4 The Basics of Risk.
Chapter 6 Market Efficiency – Definition, Tests, and Evidence
Chapter 7 Riskless Rates and Risk Premiums
Other Online Readings:
- Standard Deviation (Dispersion). https://school.stockcharts.com/doku.php?id=technical_indicators:standard_deviation_volatility
- Moving Averages. https://school.stockcharts.com/doku.php?id=technical_indicators:moving_averages
- Money Flow. https://school.stockcharts.com/doku.php?id=technical_indicators:money_flow_index_mfi
- Bollinger Bands (Standard Deviation) (The file is posted in Content – Week 2 – Other Assigned Readings- as the item #7).
- Moving Average Convergence Divergence (MACD) https://school.stockcharts.com/doku.php?id=technical_indicators:moving_average_convergence_divergence_macd
- Relative Strength Index (RSI) https://school.stockcharts.com/doku.php?id=technical_indicators:relative_strength_index_rsi
- Price Relative / Relative Strength Indicator https://school.stockcharts.com/doku.php?id=technical_indicators:price_relative
- Chart Analysis http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis
- Sharp Charts https://support.stockcharts.com/doku.php?id=sharpcharts
- Technical Analysis https://school.stockcharts.com/doku.php?id=overview:technical_analysis
Online Videos & Supplements:
Technical Analysis https://www.youtube.com/watch?v=e0i3qH_8R_4&feature=youtu.be
Investing Basics Technical Analysis https://youtu.be/BUGhiSZuLYQ
Technical Analysis Indicators https://youtu.be/fsNQr3poE3g
Market Timing –Nonfinancial & Technical Indicators https://youtu.be/lNptwXfmisQ
Market Timing Approaches – Valuing the Market https://youtu.be/3g1KmniI1Hs
De Bondt, Werner, et al. Behavioral Finance: Quo Vadis? Journal of Applied Finance. Fall-Winter 2008