You are required to analyse a listed company and make a investment recommendation report. The report provides an assessment of the company's current position and future prospects, incorporating the use of various valuation techniques to arrive at estimates of the intrinsic value of the company's shares. 

Your report should make a case for the company's shares to be rated in one of the following ways:

Sell	Hold	Buy
The shares should be sold, as a materially negative return is anticipated in the next six to 12 months.	The shares will have neither a materially positive return nor a materially negative return in the next six to 12 months.	The shares should be bought, as a materially positive return is expected in the next six to 12 months.

The final submission should fulfil the following minimum requirements

Company Analysis

Provide an overview of the company's history, operations and any structural changes it has undergone since it began. This is to understand how the company got to where it is today and what may occur in the future.

Also, discuss the ESG factors relevant for the company, including analysis of the company's contribution to the conservation of the natural world, consideration of people and relationships and standards for running a company.

Industry Analysis

Analyse the structure of the industry in which the firm operates and whether it is domesticfocussed or has a global nature. Identify the industry's major companies and where they operate and how they compete with AGL.

Evaluate the relative historical financial performance of the company among its peers

• identify the firm's major competitors and discuss why they have been selected
• identify, and explain the relevance of, five financial ratios of your choice (not to include ROE, Net Profit Margin, Total Asset Turnover or Financial Leverage) for the company and its peers over a historical period of five financial years.
• explain the performance of the company compared to its peers using this analysis
• analyse and explain the reasons for changes in these ratios over the past five years and compared to the average of the past five years
• do not simply describe the changes in the ratios

Estimate the ROE of the company and three major competitors for the most recent five years using the DuPont ROE approach.

• DuPont Analysis should be done using the 3-step procedure
  • 3 steps: Net Profit Margin, Total Asset Turnover and Financial Leverage
• analyse the company's and your selected peer companies' ROEs over the period
• show your own calculations for each component over the previous five years for the company and its three selected competitors
• compare the DuPont ROE of the company with its three peer group companies
• analyse and comment on the reasons for the change in ROE for the firm and its competitors with reference to the difference in the three components over five years
• relevant charts/graphs should be used to illustrate these figures

Answer rating: 100% (QA)

Investment Recommendation Report AGL Company Analysis AGL established in 1837 is one of Australias largest energy companies operating in both the elec... View the full answer