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Auto Manufacturers: Mod 14 Analysis

Auto Manufacturers: Mod 14 Analysis. Hannah Bliss, Paula Casini, Mairin Talerico, Lauren Walaszczyk. Agenda. Industry Analysis. Business Environment in the Auto Manufacturing Industry. US Market Share. The US automakers continue to dominate domestically

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Auto Manufacturers: Mod 14 Analysis

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  1. Auto Manufacturers:Mod 14 Analysis

    Hannah Bliss, Paula Casini, Mairin Talerico, Lauren Walaszczyk
  2. Agenda
  3. Industry Analysis Business Environment in the Auto Manufacturing Industry
  4. USMarketShare The US automakers continue to dominate domestically The foreign automakers’ sales and presence will continue to grow in the US in the next 5 years
  5. GlobalMarketShare The foreign automakers have higher presence outside the US The US automakers’ market share declines as there is increased competition internationally Other includes  Nissan, Hyundai, Honda, Chrysler
  6. Challenges/Opportunities
  7. Challenges/Opportunities
  8. Cost Structure Purchases  largest cost for automakers Price of steel and other metals has been increasing and will continue in the next 5 years Research and development and advertising also pose high costs for the industry Increasing costs are causing the profit margins to be very low
  9. Production Largest producer is North Asia, with China leading in terms of production volumes China’s economy has been rapidly growing and is expected to continue into the next 5 years North America will increase its market share as the economy recovers Europe has been relatively steady and is not expected to grow
  10. Revenue Outlook
  11. SWOT Analysis
  12. Cost of Capital WACC, Risk, and Debt Structure
  13. Weighted Average Cost of Capital Ford Weighted average cost of debt calculated via the debt footnote Significant amount of debt compared to General Motors Lower WACC because value of debt > value of equity General Motors Bloomberg Beta about 1.3, most other sources say 1.7 Cost of debt low because of low leverage compared to the industry Interest expense/Average amount of debt Toyota Bloomberg WACC
  14. Forecast Assumptions Company Metrics&Comparables
  15. Earnings Analysis
  16. Profitability Map Ford & Toyota Similar breakdown GM Effects of bankruptcy Low NEA High EATO Slowly moving towards industry peers as it continues to grow GM Financial
  17. Breaking Down RNEA
  18. Valuation & Recommendations Buy, Hold, or Sell?
  19. Valuation
  20. Auto Industry Valuation Shares outstanding and Yahoo share price amounts as of 4/28/2014 BUY!
  21. Auto Industry Valuation Remarks Recommendation: Buy Based on analyst expectations and a recovering global economy Due to: increasing sales revenue, brand recognition, heavy R&D expenditures for (greener) cars of the future GM’s recall effect on the stock price ValueREI =$ 38.69 Temporary stock drop (response to media), then buy Pervasive effect on operations, then hold Before recall Current
  22. Questions?
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