Report on Fundamental Analysis’s Techniques

Running head: Financial market and Institutions
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Financial market and institutions

Financial market and Institutions
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Executive summary
In this report paper, fundamental analysis’s techniques have been analyzed and it has
been found that how could these activities help an investor to make a better decision about
the investment into the stock market. It is quite requisite for every stockholder or investor to
make a decision about long term investment in the stocks of a company. For For conducting
this report, retail industry of Australia has been taken into the context and two companies of
retail industry has also been taken which are Wesfarmers and Woolworths limited for
performing this study n a well manner, top down analysis and bottom up analysis have been
done to make a better decision.

Financial market and Institutions
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Contents
Introduction.......................................................................................................................4
Industry overview.............................................................................................................4
Woolworth Limited..........................................................................................................4
Wesfarmers limited...........................................................................................................5
Top down analysis............................................................................................................5
Future projection on Australian stock market..............................................................8
Industry Viewpoint.......................................................................................................8
Industry data.............................................................................................................8
Future Outlook..............................................................................................................9
Current intrinsic value of companies............................................................................9
Wesfarmers limited:..................................................................................................9
Woolworths.............................................................................................................10
(Yahoo finance, 2017)....................................................................................................10
P/E model....................................................................................................................10
Wesfarmers limited:................................................................................................10
Woolworths.............................................................................................................11
Bottom up analysis.........................................................................................................11
Financial data:.............................................................................................................12
Wesfarmers.............................................................................................................12
(Morningstar, 2017)................................................................................................13
Woolworth..............................................................................................................13

Financial market and Institutions
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(Morningstar, 2017)....................................................................................................14
Ratio Analysis.............................................................................................................14
Wesfarmers.............................................................................................................14
Woolworth..............................................................................................................15
DU Pont analysis........................................................................................................16
Wesfarmers.............................................................................................................16
Woolworth..............................................................................................................17
Summary and Recommendation.....................................................................................19
References.......................................................................................................................20

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Introduction:
In this file, main concern has been put over the Fundamental analysis. It is quite
requisite for every stockholder or investor to make a decision about long term investment in
the stocks of a company. It has been observed that fundamental analysis method is crucial for
the investors as it offers the entire ups and downs information of the company of last few
years through analyzing the worth of the company. While conducting the study of
fundamental analysis, it has been observed that various information such as annual report,
financial statement, new changes in the company etc. For conducting this report, retail
industry of Australia has been taken into the context and two companies of retial industry
has also been taken which are Wesfarmers and Woolworths limited for performing this study
n a well manner (trading economy, 2017).
Industry overview:
Retail industry of Australian has been analyzed and it has been observed that this
industry of Australia offers the higher GDP of the country. It has been observed that due to
the global financial crisis the Australian retail industry has also been affected as well as it
hampered the performance of the entire companies of the industry. Still the Australian retail
company is performing very well and thus the companies of the industry had affected the less
in comparison of other industry’s firms. Further, Wesfarmers and Woolworths limited has
been observed as two of the biggest Australia retailing companies in the market of Australian.
Hence, for performing this report, these 2 companies have been taken into the context as the
growth of the industry hugely depends over these two companies.
Woolworth Limited:
Woolworth’s limited company is recognized as one of biggest Australian retailing
companies. Woolworth limited is operating its business from last 2 decades in the Australian
market. In 1997, it has registered itself in the Australian stock exchange to trade the business
of stocks. The head office of the company is situated at South Africa. This company has
operated its business functions into numerous sections such as Woolworths logistic segment
for handling the transportation, Woolworths clothing segment for producing and selling the
home ware items, beauty products and clothing, Woolworth food consists the food outlets,

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Woolworths financial services department offers various financial services to the clients,
further, various other departments are also there such as Country road group, witchery group,
David Jones etc. Currently, the company is operating its business in approx 14 companies
with the 43000 man power and it is operating its business through 1300 outlets. Australian
Retail Company and the annual report of the company depict that almost 40% of total
revenue is earned by the company from Australian market only (Morningstar, 2017).
Wesfarmers limited:
Wesfarmers limited company is recognized as one of biggest Australian retailing
companies. Wesfarmers limited is operating its business from last 10 decades in the
Australian market. In 1914, this company has come into existence and it has registered itself
in the Australian stock exchange to trade the business of stocks. The head office of the
company is situated at Perth in Australia. This company has operated its business functions
into numerous sections such as gas processing, retail industry, safety product distribution
industry, distribution industry, coal mining industry, production industry and many, chemical
industry, fertilizers manufacturing industry and lastly investment businesses in various
countries like UK, Australia, new Zealand and global. Presently, company has diversified its
business into various markets and industries to manage the performance and profitability of
the company (Nelson et al, 2012).
Top down analysis:
Fundamental analysis is one of the methods to manage the portfolio or stock of the
company. Top down analysis and bottom up analysis are the two methods of technical
analysis. In fundamental analysis, external factor and internal factor of a company has been
analyzed to monitor the performance and positioning of the company and the industry. Top
down analysis express its concern about various market changes and the economical factor of
the country. Basically, this analysis has been performed over the Australian retail industry of
to analyze the various macro economical aspect of the industry. It has been found through the
study that various issues are faced by the investors while making a decision about the
investment in a stock so various methods are available for them to make a better decision.
Top down analysis is one of them. For performing the study over the top down analysis of
Australian retail industry various macro economical factors have been analyzed such as,