Energy Company Analysis is (Plug Power Inc. (PLUG))
Research the company and prepare a report about it for investors. Using financial ratios as you did for the financial analysis assignment will be one part of your analysis. Making assumptions about revenues and margins, one can estimate how income and the financial ratios will change. What may change revenues and margins does not only depend on the company’s actions, but also on the general economic, environmental and social conditions and the demand and price of their product. The conclusion of your analysis does not have to be a “buy” or a “sell” for the company. I am attaching a recent analysis about Occidental Petroleum (OXY). It is very thin in terms of numbers (it does not even mention any financial ratios) and gets into things about refinancing the debt, oil prices, etc. What is of interest also, is that there is a case made to buy OXY and a case not to buy it. If you watch a show on CNSB or Bloomberg television, it is very common to see two guests one of which argues for something and the other against it. This is how the world of financial analysis and advising operates. There are no clear-cut answers. As they say, “nobody rings a bell when it is time to buy (or sell)”. So, prepare your paper accordingly. You do not have to be absolute in your overall conclusion, but also do not play all sides either.Obviously, you should start with the company’s financial statements from the annual report or other sources. In addition, you should search for news items about the company’s operations, finances, market position, prospects, etc. Your report should have a substantial quantitative portion. You could create a spreadsheet that recalculates the company’s income statement and financial ratios under various assumptions. In addition to the numbers, you should consider how the overall economy, market trends, politics, etc. would have an impact on your company. Based on that, you can make arguments on whether one should invest in the company or not and under what circumstances. You may include other people’s opinions in what you write. There are analysts whose jobs are to comment on the companies they follow. You may read their recent writings and use them to shape your argument and opinion.
It should be done in a term paper format. How you structure it exactly is up to you, but it could have the following sections:
- Introduction and description of the company
- The company’s financial position
- Numerical analysis of the finances.
- External factors that may influence performance (market, politics, environment, etc.)
- Recommendations about the company as an investment.
- Any other information or knowledge you wish you had so that you could have done a better job.
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