XXX Company Name – <a great business at a reasonable price OR cheap growth

OR special situation OR etc>

Date: 01/23/2015 ROE (2016 estimate): 21% <authors name>

Ticker: IBM 2015 P/E: 19 MBA – Class of xxxx
Stock price: $27.44 2016 P/E: 16 (my estimate) The University of xxxxxx
Market Cap: $17.1B Recommendation: Strong Buy <authors email>
Enterprise Value: $17.9B (approx) Target price: $69 by 2018 <authors phone number>

Executive Summary

Company Description

Investment Thesis

Industry and Competitive Analysis

Management team

Financial Model

Q1-Q3-
2013 2014 2015 2016 Fy-2016 2017
(actual) (actual) (actual) (actual) (1) (estimate) (1) (estimate) Notes
SALES:
Segment 1 219.0 259.0 371.0 387.0 516.0 1548.0
Segment 2 976.2 1234.4 1538.7 1683.1 2244.1 6732.4
Segment 3 334.3 453.6 677.9 703.6 938.2 3752.7
Other sales 20.0 19.0 20.0 16.1 21.5 64.4
Total Sales 2078.0 2518.0 3276.0 3476.2 4634.9 13971.0

GROSS PROFIT:
Segment 1 98.6 116.6 167.0 174.2 232.2 696.6 45% gross margin
Segment 2 390.5 493.8 646.3 706.9 942.5 2491.0 37% gross margin

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Segment 3 133.7 181.4 284.7 295.5 394.0 1388.5 37% gross margin
Other sales 120.0 110.0 129.4 127.7 170.2 299.9 37% gross margin
Total Gross Profit 847.3 1095.4 1518.9 1623.3 2164.4 5537.5
Gross Profit Margin 40.8% 43.5% 46.4% 46.7% 46.7% 39.6%

R&d expense 107.2 165 213.5 245.7 327.6 558.8 4% of sales

SG&A 358.1 406.4 520.6 508.6 678.1 1397.1 10% of sales
Other expense 15.7 0.0 -92.6 0 0.0 0.0
Operating income 366.3 524 877.4 869 1158.7 3581.6
Tax/ Finance expense 88.1 113.7 186.4 190 253.3 788.0 22% of Op. Income
NET INCOME: 278.2 410.3 691 679 905.3 2793.6
Net Profit Margin 13.4% 16.3% 21.1% 19.5% 19.5% 20.0%

Source: XXX annual reports, XXX press releases, YYY Sell side report, and author’s estimates

Financial Model Notes:

1) Excludes one time charge for xxx acquisition.
2) Assumes 15% operating margins
3) Assumes 6% unit growth and 3% pricing growth
4) Etc

Company Valuation & Price Target

1. Peer multiples
2. DCF
3. Private market value

Thesis Risks & Risk Mitigation

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