FIN3003 Fall 2014

Kenzie Hartwig
December 10, 2014
Project
Instructions: You need to prepare a short investment outlook for a public company.
This outlook needs to be a cohesive narrative (2 to 4 pages long plus exhibits, if you
choose to include any) that answers, at the very least, the questions below. All of
the information about the stock price and financial statements can be found in
Yahoo Finance (http://finance.yahoo.com) using the ticker symbol of the company.
If the last digit of your banner id is 0-2 your company is Amazon (ticker symbol
AMZN), if it is 3-5 your company is Boeing (ticker BA), if it is 6-9 your company is
Exxon (ticker XOM).
You can work in teams of two (2) if you prefer. In this case, chose the company
based on either banner id number. Please turn in your report through Blackboard.
a) What is the stock return of the company during the past year?
Close
3.02%
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12/9/201
4
12/10/20
13

129.6
6
133.7

0.76%
129.6
6
130.6
5

b) Compare your companys stock return to one of its competitors.

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12/9/201
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12/10/20
13

Close
14.29
%

12.68
%

59.4

59.4

67.89

66.93

Boeings main competitor is Airbus Group N.V. (EADSF) the stock return over
the past year for Boeing is -3.02% and Airbus is 14.29% although Boeing has
a negative closing number that number is not necessarily bad.

c) Does the company pay a dividend? If so, what is the dividend yield? Is this
dividend yield attractive compared with fixed investment options, like a
certificate of deposit? (Note: to compute the dividend yield, sum all the
dividends paid during the last year and divide it by the stock price today.)
Yes, Boeing pays a dividend of $.73. The dividend yield is .0225% or
2.25%. The CD for Bank of America is .15% for $100,000 for 120
months and more, which is significantly less than and invest option
with Boeing. However, owning a stock like Boeing is more risky
because of the possibility of the price can go up or down.
d) Is the company generating profits? Compute the return on assets for the
companys last two fiscal years. Is the stock performance of the firm during
the last year in line with its earnings performance? Why?
Boeing is generating profits; for 2012 the ROA was 4.38% and for 2013
it was 4.94%. The stock price of Boeing was set at -3.02%, the
performance of the company in 2013 was 4.94%. So the performance
of the company is going up while its stock price went down which is
not in line with its earnings. Why? Factors other than earnings play
part in investors opinions of the company.
e) In your opinion, what is the biggest risk that the company is facing? Is it
idiosyncratic or systematic?
The biggest risk that Boeing is facing is the idiosyncrasy of the
mannerisms of its stockholders. Since their stock is currently negative
this means that the stockholders are selling their shares instead of
buying more which is odd because the earning of the company is
growing not depreciating.
f) Does your company have a stakeholder engagement program (note: look in
the companys website for community or stakeholder engagement, or
corporate citizenship)? Is there a stakeholders group in fight with the
company? Do you think this can affect the company in the long run?
Yes, Boeing has both corporate citizenship and community
engagement programs. No there is no stakeholders groups in a fight
with Boeing. I think it can affect the company in the long run due to the
fact that the main factors that directly involve employee engagement
are leadership ( managers as communicators, leadership
competencies, employee development, sharing business strategies,
ethics, trust and respect), work ( job responsibilities/ design,
empowerment, Lean, tools and technology resources, employee
Involvement (teams and working together) training), and work
environment (diversity, safety, career development, pay and
benefits, Wellness Employee Assistance Program, Community
Involvement, pride, belonging) these three criteria are the drivers that
Boeing is looking for in their employees and stakeholders if they fail to
reach the high standards that they have laid down as a guide it could
possibly have a bad affect on the long term success of the company.

g) During the past year, the US dollar has appreciated against most major
currencies (Euro, British pound, and Japanese yen). Is your company affected
by this? How?
Boeing airline is a company that generates profit so when the currency
rate raising (within the U.S.) it gives the company a great advantage to
accumulate more revenue from foreign countries. However, with its off
shore investments it prohibits the company when the currency rate is
lower it allocates Boeing limiting their profitability.

h) It is expected that the Federal Reserve will increase its federal funds interest
rate sometime in 2015. How will this affect your company? Answer this from
two perspectives: the product market of the company and the financing
needs of the company (use the interest coverage ratio).
The interest rate rising will affect Boeing because it makes it harder to
borrow money with the interest rate rising. So basically you get less
money when borrowing for any company when dealing with overnight
funds. Using the interest coverage rate for 2012 the rate was set at
14.37% and for 2013 17.15% anything below 1 shows that the
company cannot meet their interest expenses and could easily fall into
bankruptcy. Boeing has a good interest ratio which shows that the
company has a good history of paying its debt back.