Finance: Final Project Part II
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Added on 2019-09-19
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This report provides a detailed analysis of Target Corporation and Wal-Mart Stores. It includes a comparison of their three-year returns, industry comparison, performance over time, strengths, weaknesses, and investment opportunities.
Finance: Final Project Part II
Added on 2019-09-19
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FINANCE: FINAL PROJECT PART II
Finance: Final Project Part IITable of ContentsThree-year Returns......................................................................................................................................2Target Corporation..................................................................................................................................2Wal-Mart Stores......................................................................................................................................2Comparison.............................................................................................................................................3Industry Comparison...................................................................................................................................3Target Corporation..................................................................................................................................3Wal-Mart Stores......................................................................................................................................4Performance over Time...............................................................................................................................5Target Corporation..................................................................................................................................5Strengths..............................................................................................................................................5Weaknesses.........................................................................................................................................6Wal-Mart Stores......................................................................................................................................7Strengths..............................................................................................................................................7Weaknesses.........................................................................................................................................7Comparison.............................................................................................................................................8Investment...................................................................................................................................................8References.................................................................................................................................................101
Finance: Final Project Part IIThree-year ReturnsTarget CorporationTarget Corporation’s three year return is calculated in absolute terms as well as in compoundedor annualized growth terms if the profits are reinvested (Chan, 2009). The financial year ofTarget Corporation ends at 31st of January every year so closing share price at the end of thismonth is taken for calculation. The opening price at the beginning of February 2013 was $60.94(B953, TGT Historical Prices) while closing price at the end of January 2016 was $72.42 (E200,TGT Historical Prices). Thus the absolute return on the Target’s stock will be:AR = (72.42 - 60.94) / 60.94 * 100= 18.83% (I9, TGT Price History)The return is also calculated using compounded annual growth method in which CAGR(Compounded Annual Growth Rate) is calculated using the following equation:72.42 = 60.94 (1 + r) 3Where, r = CAGRThus, the value of r is calculated to be at 5.59% (J9, TGT Price History). The stock of Target hasincreased wealth by compounding it by 5.59% each year for three years.Wal-Mart StoresThe return on Wal-Mart’s stock is also calculated using the methodology discussed above. Thecompany’s opening share price at the beginning of February 2013 is $70.11 (B953, WMT2
Finance: Final Project Part IIHistorical Prices) and the closing price at the end of January 2016 is $66.36 (E200, WMTHistorical Prices).Absolute Return = (66.36 – 70.11) / 70.11 * 100= - 5.34% (I9, WMT Price History)The CAGR value is:66.36 = 70.11 (1 + r) 33-Year CAGR = - 1.85% (J9, WMT Price History)ComparisonCleary the stock of Target Corporation has given positive return over three year period while thatof the Wal-Mart has shown diminution in value. The shareholders have lost their money byinvesting in the Wal-Mart’s stock in those years starting from 2013 to 2016.3
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