FI 306 Semester Project
Financial Statement Analysis & Equity Valuation of Lockheed Martin (LMT) and
Northrop Grumman (NOC)
The objective is to:
(1) Prepare a financial analysis of both companies;
(2) Develop financial projections for both companies, explicitly projecting future
dividends and compare those to projections produced by Value Line;
(3) Prepare a valuation of both companies utilizing the dividend discount model;
(4) Justify your valuation relative to current valuations of your companies and broader
market valuations; and
(5) Produce an investment recommendation for both of your companies and clearly
identify whether you would prefer one stock over the other stock.
Content of your report:
Based on class discussions, please complete the following sections within your report:
(1) Description: describe your company, the industry it operates in, and your companyÊposition (i.e. leadership) in the industry;
(2) Financial Statement Analysis: prepare all the financial ratios in a separate exhibit,
and within this section, evaluate the companyàprofitability, efficiency and financial stability;
(3) Financial Projections: based on the information from your financial statement
analysis, prepare financial projections (hint: limit your horizon to 3-5 years), making
assumptions regarding the dividend payout ratio to project future dividends;
(4) Valuation: based on your dividend projections, prepare a valuation of your company
utilizing the dividend discount model; compare and justify this valuation relative to Value Line,
Bloomberg valuations and other methodologies (P/E, Price/Book).
(5) Recommendation/Conclusion: present your recommendation for both companies,
recommending one company versus the other company, interpreting your results and present
your recommendation (overvalued, undervalued, or fairly valued) along with a discussion any
limitations of your study.
Prepare a word-processed report (maximum of 5 pages written excluding tables and other
supporting material, and all supporting tables, balance sheets, income statements, graphs,
computations, and copies of data sources and detailed bibliography).
Evaluation: This paper will be evaluated based upon:
(1) the application of the concepts discussed in Chapters 7, 8, 13 and 14;
https://studylib.net/doc/25825627/essentials-of-investments–12th-edition–zvi-bodie-profes…
Chapter 7 enter 221 out of 769, Chapter 8 253 out of 769, etc.
(2) the approach toward developing this security analysis that is consistent with your
conclusions.
Be sure to include the Value Line report for each of the firms analyzed

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