Equity Valuation and Analysis - Mark Moore

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move. In addition, Dow has the highest R&D expense of any other competitor in the industry ($1,164 mill.) and is looking to produce the most cutting-edge products. Flexible Delivery As one of the world's leading multi-national manufacturing companies, Dow increased the efficiency of its global transportation by partnering with one of the lead logistics provider’s worldwide. BDP International had a long track record of exceptional global transportation as well a time tested reputation for great customer service. BDP handles all of Dow’s Marine Packaged Cargo business, as well as their global supply chain analysis and implementation, through a strategic approach. "It reflects our longheld belief that there is no 'one-size-fits-all' logistics solution. From the start, the goal then and now has been to drive value back to Dow through their global supply chain, through a strategic approach, metrics and metrics analysis initiatives, as well as transactional order execution functions" (John Bolte, BDP Chief Operating Officer, www.BDPoint.com). Employees of BDP are what make Dow’s global market succeed. BDP has appointed a whole team of employees to over-see and operate Dow’s delivery of products. With the global transportation taken care of, Dow can put primary focus on the production process. With plants in over 15 states in the U.S., Dow is able to deliver products in a timely and efficient manner. With the hazard of chemicals being transported, Dow played a key role in the creation of the American Chemistry Council’s Responsible Care. With the help of this council, Dow set the standard for security and safety in the chemical transportation business. Investment in Research and Development Like previously mentioned, Dow is an industry leader in Research and Development. In December 2006, Dow reportedly employed 5,600 people in a variety of research and development positions. Putting such an emphasis on the development of new products as well as refining existing ones shows that Dow is looking to expand. In the chemical industry, the majority of competition is in the R&D department. The Dow Chemical Analysis Page 34
company with the most innovative, cutting-edge product grabs the attention of buyers. Dow’s Research and Development expenses have slowly gotten higher year after year. Without the constant development of new products, Dow would lose its competitive edge. With the construction under progress with the Dow Center in Shanghai, Dow is placing a state of the art research and development lab that compares to no other. Housing one of the top research labs in the world, Dow is looking to expand even further into the global market. Dow’s R&D Expenses $’s in millions In comparing the returns from the past three years of Research and Development expenses relative to the Gross Profit of the proceeding years, Dow shows on average a 14.48% return on R&D Investments. Looking Ahead Dow Chemical has continued to improve in striving to be the industries best. With their production progress at an all time high, Dow looks to increase sales even higher with the variety of products offered. With their vast movement into the global market, Dow looks to keep input costs low by purchasing materials abroad. With Dow Chemical Analysis Page 35
Page 1 and 2: Equity Valuation and Analysis Frank
Page 3 and 4: Executive Summary Investment Recomm
Page 5 and 6: Accounting Analysis When analyzing
Page 7 and 8: Valuations In determining Dow’s c
Page 9 and 10: in July of 2006. Comparing Dow’s
Page 11 and 12: Dow provides consumers with special
Page 13 and 14: States as well as some smaller area
Page 15 and 16: ample amount of excess capacity. Gi
Page 17 and 18: Market Share within United States 5
Page 19 and 20: It is also important to note that t
Page 21 and 22: First we must consider scale of eco
Page 23 and 24: The bargaining power of buyers can
Page 25 and 26: Price sensitivity of suppliers in t
Page 27 and 28: cases, firms will choose to impleme
Page 29 and 30: strategy to gain or maintain market
Page 31 and 32: cannot compete on a large scale of
Page 33: approximately $600-800M/yr. It is t
Page 37 and 38: identification of accounting polici
Page 39 and 40: Post-Retirement Benefit Plans The c
Page 41 and 42: As seen in previous figures, firms
Page 43 and 44: policies. These variations can acco
Page 45 and 46: certain numbers effecting key succe
Page 47 and 48: Operating leasing is considered a r
Page 49 and 50: transparent view of how a company o
Page 51 and 52: cards. In a perfect sales environme
Page 53 and 54: The inventory turnover is key indic
Page 55 and 56: The Asset Turnover ratio is one way
Page 57 and 58: This ratio is an indication of how
Page 59 and 60: determined that they were easily wi
Page 61 and 62: shown growth approaching just under
Page 63 and 64: inventories within a year; therefor
Page 65 and 66: how efficient a company is in exten
Page 67 and 68: inventory sit on the shelves, the l
Page 69 and 70: Liquidity Overview In the overall s
Page 71 and 72: OPERATING PROFIT MARGIN 2002 2003 2
Page 73 and 74: Net Profit Margin 2002 2003 2004 20
Page 75 and 76: Return on Assets 15% 10% 5% 0% -5%
Page 77 and 78: interest requirements on debt” (R
Page 79 and 80: to fall into debt financing and pos
Page 81 and 82: endeavors and cash flows. In 2006,
Page 83 and 84: Financial Statement Forecasting Ana
Page 85 and 86:
Income Statement When forecasting t
Page 87 and 88:
Balance Sheet To start on the balan
Page 89 and 90:
To find the forecast for total liab
Page 91 and 92:
Statement of Cash Flows Seeing as c
Page 93 and 94:
Cost of Debt Liabilities Source Int
Page 95 and 96:
acquired at a rate of Ke. These 2 s
Page 97 and 98:
Trailing method divides the given p
Page 99 and 100:
DIVIDEND PPS D/P HUN N/A DD 1.48 48
Page 101 and 102:
EBITDA PPS P/EBITDA HUN 0.7365 18.9
Page 103 and 104:
EBITDA EV EV/EBITDA HUN 0.7365 7.23
Page 105 and 106:
financial statement, and a calculat
Page 107 and 108:
Out of all of the intrinsic valuati
Page 109 and 110:
This sensitivity analysis was used
Page 111 and 112:
fairly valued would be to have a RO
Page 113 and 114:
Net Sales/Cash from sales 2002 2003
Page 115 and 116:
Altman Z-score 2002 2003 2004 2005
Page 117 and 118:
SUMMARY OUTPUT 36 Month Regression
Page 119 and 120:
Page 121 and 122:
Page 123 and 124:
Page 125 and 126:
Page 127 and 128:
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Equity Valuation and Analysis - Mark Moore

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