Monthly Archives: October, 2019

Verizon Communications Inc (VZ) Extended Graph Analysis

October 24th, 2019 Posted by Extended Analysis No Comment yet

About the Company

verizon

Verizon Communications Inc is a telecommunication company operating globally and founded in October 7, 1983 and incorporated in Delaware. USA.The company is headquartered in New York, New York.

Verizon Communications was created by Bell Atlantic Corp. and GTE Corp. The company provides wireless voice and data services through its wireless segments, internet access on different devices.

Verizon Communications Inc (VZ) Extended Graph Analysis

1) VZ CASH FLOWS

VZ CASH FLOWS

2014 2015 2016 2017 2018 2019
Net cash provided by operating activities 30,631,000,000 38,930,000,000 22,715,000,000 25,305,000,000 34,339,000,000 33,742,000,000
Net cash used for investing activities -15,856,000,000 -30,043,000,000 -10,983,000,000 -19,372,000,000 -17,934,000,000 -17,795,000,000
Net cash provided by (used for) financing activities -57,705,000,000 -15,015,000,000 -13,322,000,000 -6,734,000,000 -15,377,000,000 -15,555,000,000
Capital expenditure -17,545,000,000 -27,717,000,000 -17,593,000,000 -17,830,000,000 -18,087,000,000 -17,260,000,000
Free cash flow 13,086,000,000 11,213,000,000 5,122,000,000 7,475,000,000 16,252,000,000 16,482,000,000

Facts:

  • The net cash provided by operating activities was $33.742 billion in 2019 trailing twelve months.
  • Net cash used for investing activities was -$17.795 billion in 2019 trailing twelve months.
  • Net cash provided by (used for) financing activities was -$15.555 billion in 2019 trailing twelve months.
  • The capital expenditure was -$17.260 billion in 2019 trailing twelve months.
  • Free cash flow was $16.482 billion in 2019 trailing twelve months.

Explanation:

  • Net cash provided by operating activities was erratic in movement, howbeit, it maintained an average of $31 billion in the last five years. The growth was 10 percent.
  • Cash used for investing activities is comprised of investment in property, plant and equipment, which represent 97 percent of the total. It also consists of acquisitions and purchases of intangibles. 
  • Net cash provided by (used for) financing activities represents debt repayment in significant amount, and payment of dividend at 64 percent of the total.
  • Capital expenditure represents investment in property, plant and equipment.
  • Free cash flow was positive in the last five years and it has grown 26 percent.

Interpretation

The company has managed to provide cash for the daily operation of the business, however further analysis should be done whether the cash was enough for its daily operation.

2. VZ BALANCE SHEET

VZ BALANCE SHEET

2014 2015 2016 2017 2018 2019
Total cash 11,153,000,000 4,820,000,000 2,880,000,000 2,079,000,000 2,745,000,000 2,745,000,000
Total current assets 29,623,000,000 22,280,000,000 26,395,000,000 29,913,000,000 34,636,000,000 34,636,000,000
Net property, plant and equipment 89,947,000,000 83,541,000,000 84,751,000,000 88,568,000,000 89,286,000,000 89,286,000,000
Total non-current assets 203,085,000,000 222,360,000,000 217,785,000,000 227,230,000,000 230,193,000,000 230,193,000,000
Total assets 232,708,000,000 244,640,000,000 244,180,000,000 257,143,000,000 264,929,000,000 264,929,000,000
Short-term debt 2,735,000,000 6,489,000,000 2,645,000,000 3,453,000,000 7,190,000,000 7,190,000,000
Total current liabilities 28,064,000,000 35,052,000,000 30,340,000,000 33,037,000,000 37,930,000,000 37,930,000,000
Long-term debt 110,536,000,000 103,705,000,000 105,433,000,000 113,642,000,000 105,873,000,000 105,873,000,000
Total liabilities 220,410,000,000 228,212,000,000 221,656,000,000 214,047,000,000 211,684,000,000 211,684,000,000
Total stockholders’ equity 12,298,000,000 16,428,000,000 22,524,000,000 43,096,000,000 53,145,000,000 53,145,000,000

 

Facts:

  • Total cash was $2.7 billion in 2018.
  • Current assets was $34.636 billion in 2018.
  • Net property, plant and equipment was was $89 billion in 2018.
  • Non-current assets was $230 billion in 2018.
  • Total assets was $264.9 billion in 2018.
  • Short-term debt was $7.1 billion in 2018.
  • Current liabilities was $37.93 billion in 2018
  • Long-term debt was $105.873 billion in 2018.
  • Total liabilities was $211.684 billion in 2018.
  • Stockholders equity was $3.1 billion in 2018.

Explanation:

  • Total cash represents one percent of the total assets in 2018.
  • Current assets represents 13 percent of the total assets and has a growth of 17 percent in five years.
  • Net property, plant and equipment represents 34 percent of the total assets, PPE was stable in the last five years.
  • Non-current assets represents 87 percent of the total assets. Intangible assets and PPE has a significant amount.
  • Total assets has grown 14 percent in five years.
  • Short-term debt represents 19 percent of the total current liabilities and 3 percent of the total liabilities in 2018.
  • Total current liabilities represents 18 percent of the total liabilities.
  • Long-term debt represents 50 percent of the total liabilities.
  • Non-current assets represents 82 percent of the total liabilities. Long-term debt has a significant amount.
  • Total liabilities represents 80 percent of the total liabilities and stockholders equity.
  • Stockholders equity represents 20 percent of the total liabilities and stockholders equity and has a growth of 332 percent in five years.

Interpretation

Balance sheet shows that current assets is lesser than the current liabilities by 9 percent in 2018. In other words, the company’s current assets is not enough to meet its current liabilities on time when due date comes. 

3. VZ FINANCIAL RATIOS

VZ FINANCIAL RATIOS

2014 2015 2016 2017 2018 2019
Asset Turnover (avg) 0.50 0.55 0.52 0.50 0.50 0.48
Return on Asset (ROA) % 3.80 7.49 5.37 12.01 5.95 5.80
Return on Equity (ROE) % 37.65 124.48 67.40 91.74 32.27 29.17
Financial Leverage (avg) 18.92 14.89 10.84 5.97 4.98 5.00
Return on Invested Capital % 10.38 16.66 12.38 22.62 11.89 10.99
Interest Coverage 4.11 6.74 5.80 5.35 5.06 5.17

Facts:

  • The asset turnover was averaging 0.48 in 2019 trailing twelve months.
  • Return on assets was 5.80 percent in 2019 trailing twelve months.
  • Return on equity was 29.17 percent in 2019 trailing twelve months.
  • Financial leverage was averaging 5.00 in 2019 trailing twelve months.
  • Return on invested capital was 10.99 percent in 2019 trailing twelve months
  • The interest coverage was 5.17 in 2019 trailing twelve months

Explanation

  • Asset turnover indicate that for every dollar in assets, VZ generates 48 cents, which is not very efficient.
  • Return on assets indicate that the company generates 5.8 cents of net income for every dollar invested in assets. 
  • Return on equity indicates that VZ generated 29 cents in profit for every dollar invested in common stock. 
  • Financial leverage of 5.0 means that for every dollar in equity VZ had 5 in total assets. The company is running at risk at rate 5.0.
  • Return on invested capital indicates that VZ generated 11 cents for every dollar invested in capital.
  • Interest coverage indicates that the company can make 5.17 times more earnings than VZ’s current interest payment.  

Interpretation

The asset turnover ratio shows that the company was not very efficient in generating sales from its assets. Moreover, the financial leverage means that the company is at risk at the rate of 5.0, the company uses more debt in its capital structure.

4. VZ INCOME AND MARKET

VZ INCOME AND MARKET

2014 2015 2016 2017 2018 2019
Sales 127,079,000,000 131,620,000,000 125,980,000,000 126,034,000,000 130,863,000,000 131,087,000,000
EBIT 19,599,000,000 33,060,000,000 27,059,000,000 29,188,000,000 26,869,000,000 28,462,000,000
Net Income 9,625,000,000 17,879,000,000 13,127,000,000 30,101,000,000 15,528,000,000 15,839,000,000
Market Capitalization 194,369,000,000 188,262,000,000 217,611,000,000 215,925,000,000 232,303,000,000 246,491,000,000
Intrinsic Value 466,577,266,413 937,481,255,842 671,490,240,559 369,451,760,183 434,344,652,563 786,489,079,285

Facts:

  • Sales was $131 billion in 2019 trailing twelve months.
  • EBIT was $28.462 billion in 2019 trailing twelve months.
  • Net income was $15.839 billion in 2019 trailing twelve months.
  • Market capitalization was $246.491 billion in 2019 trailing twelve months.
  • Intrinsic value was $786.489 in 2019 trailing twelve months.

Explanation

  • The sales growth was 3 percent in the last five years. 
  • Sales was stable averaging $129 billion.
  • EBIT has grown 45 percent in the last five years and stable.
  • Net income has a growth of 65 percent in the last five years.
  • Net income represents 12 percent of total sales.
  • Market capitalization was erratic in movement in the last five years, and has grown 27 percent.
  • Intrinsic value has a growth of 68 percent.

Interpretation

VZ has not experienced negative bottomline in the last five years. In 2017 net income soared 129 percent from the previous year due to significant amount in provision for income tax. 

5. VZ TOTAL EXECUTIVE COMPENSATION

VZ TOTAL EXECUTIVE COMPENSATION

2014 2015 2016 2017 2018
44,450,000 47,770,000 47,540,000 60,470,000 102,859,957

Facts:

  • In 2014, the total executive compensation was $44.45 million.
  • In 2015, the total executive compensation was $47.77 million.
  • The total executive compensation in 2016 was $47.54 million.
  • The total executive compensation in 2017 was $60.47 million.
  • Total executive compensation in 2018 was $102.860 million.

Explanation

  • Lobbying in 2014 was 0.46 percent of the net income.
  • Lobbying expenses in 2015 was 0.27 percent of the net income.
  • While in 2016, lobbying was 0.36 percent of the net income.
  • In 2017 lobbying expenses was 0.20 percent of the net income.
  • Expenses in lobbying in 2018 represents 0.66 percent of the net income.

Interpretation

The lobbying expenses from 2014 to 2018 was less than one percent of the net income which is a very minimal amount of expenditure in lobbying.

5.a. VZ KEY EXECUTIVE COMPENSATION

VZ KEY EXECUTIVE COMPENSATION

2014 2015 2016 2017 2018
Total Key Executive Compensation 24,650,667 24,400,970 33,585,716 53,211,627 102,859,957
Hans Enk Vestberg, Chairman and CEO 0 0 0 9,817,419 22,206,086
Lowell C. Macadam, Former Chairman and CEO Former 18,306,509 18,343,660 17,937,581 17,937,581 18,637,867
Kumara Guru Gowrappan, EVP and CEO, Verizon Media Group 0 0 0 0 12,752,938
Timothy M. Armstrong, Former EVP, President and CEO – Oath 0 0 0 0 12,488,942
Matthew D. Ellis, EVP and CFO 0 0 2,697,359 5,649,368 7,060,676
John G. Straton, Former EVP and President, Global Operations 6,344,158 7,057,310 7,040,609 13,540,151 15,646,852
Marc C. Reed, EVP and Chief Administrative Officer 0 0 6,173,169 6,267,108 7,352,470
Ronan Dunnel, EVP and President, Verizon Consumer Group 0 0 0 0 6,714,126

Facts:

  • Total key executive compensation in 2018 was $103 million.
  • Chairman and CEO, Hans Erik Vestberg total compensation was $22,206,086 in 2018.
  • Former Chairman and CEO former, Lowell C. Macadam total compensation in 2018 was $18,637,867.
  • EVP and CEO. Verizon Media Group, Kumara Guru Gowrappan compensation in 2018 was $12,752,938.
  • Former EVP, President and CEO – Oath Timothy M. Armstrong total compensation was $12,488,942.
  • EVP and CFO Matthew D. Ellis total compensation was $7,060,676.
  • Former EVP and President, Global Operations John G. Straton total compensation was $15,646,852.
  • EVP and Chief Administrative Officer Marc C. Reed total compensation was $7,352,470.
  • EVP and President, Verizon Consumer Group Ronan Dunnel total compensation was $6,714,126.

Explanation

  • Total key executive compensation in 2018 was categorized into:
    • Salary $8,414,698
    • Bonus $2,999,998
    • Restricted stock award $61,046,184
    • Non-equity compensation $15,657,375
    • Other compensation $14,741,702
  • Hans Erik Vestberg total compensation represent 22 percent of the total key executive compensation in 2018.
  • Lowell C. Mcadam total compensation represent 18 percent of the total key executive compensation in 2018.
  • Kumara Guru Gowrappan total compensation represents 12.40 percent of the total key executive compensation in 2018.
  • Timothy M. Armstrong total compensation represents 12.14 percent of the total key executive compensation in 2018.
  • Matthew D. Ellis total compensation represents 7 percent of the total key executive compensation in 2018.
  • John G. Straton total compensation was 15 percent of the total key executive compensation in 2018.
  • Marc C. Reed total compensation represent 7 percent of the total key executive compensation in 2018.
  • Ronan Dunnel total compensation represents 6.5 percent of the total key executive compensation in 2018.

Interpretation

The total key executive compensation represents 0.66 percent or less one percent of the net income for 2018.

6. VZ LOBBYING

VERIZON LOBBYING

ANNUAL LOBBYING
1998 21,260,000 2009 17,680,000
1999 5,320,000 2010 16,850,000
2000 10,480,000 2011 15,690,000
2001 8,200,000 2012 15,020,000
2002 8,060,000 2013 13,510,000
2003 9,100,000 2014 12,900,000
2004 9,080,000 2015 11,430,000
2005 11,770,000 2016 10,080,000
2006 13,210,000 2017 12,230,000
2007 12,560,000 2018 12,060,000
2008 17,910,000 2019 5,008,000

Facts:

  • Annual lobbying in 1998 was $21,260,000.
  • Annual lobbying in 1999 was $5,320,000.
  • In the year 2000, annual lobbying was $10,480,000
  • In 2001, the annual lobbying was $8,200,000.
  • The 2002 annual lobbying was $8,060,000.
  • The 2003 annual lobbying was $9.1 million.
  • 2004 annual lobbying was $9.08 million.
  • 2005 annual lobbying was $11,770,000.
  • 2006 annual lobbying was $13,210,000.
  • 2007 annual lobbying was $12,560,000.
  • 2008 annual lobbying was $17,910,000.
  • 2009 annual lobbying was $17,680,000.
  • 2010 annual lobbying was $16,850,000.
  • 2011 annual lobbying was $15,690,000.
  • 2012 annual lobbying was $15,020,000.
  • 2013 annual lobbying was $13,510,000.
  • 2014 annual lobbying was $12,900,000.
  • 2015 annual lobbying was $11,430,000.
  • 2016 annual lobbying was $10,080,000.
  • 2017 annual lobbying was $12,230,000.
  • 2018 annual lobbying was $12,060,000
  • 2019 lobbying was $5,008,000.

Explanation:

The company is spending a yearly lobbying from 1998 to 2019.  A note from OpenSecret state that, all lobbying expenses report came from the Senate Office of Public Records. The data for the most recent years was downloaded on September 19, 2019.

6.a. VZ LOBBYING BY INDUSTRY

VZ LOBBYING BY INDUSTRY

Industry Total
Telephone Utilities 4,164,817
Internet 843,183
Total 5,008,000

Facts:

  • Total amount lobbied on telephone utility industries was $4,164,817 in 2018.
  • Total amount lobbied on Internet industries was $843,183 in 2018.

Explanation

  • Lobbied amount on telephone utility industries represents 83 percent of the total amount lobbied in 2018.
  • Lobbied amount on internet industries represents 17 percent of the total amount lobbied in 2018.

7. VZ FINANCIAL STRENGTH

VZ FINANCIAL STRENGTH

DATA:

Working capital $131,087,000,000
Total assets $264,829,000,000
Sales $131,087,000,000
EBIT $28,462,000,000
Market value of equity $253,909,000,000
Book value of total liabilities $211,684,000,000
Retained earnings $43,542,000,000

CALCULATION

 

Ratio Score Result
A – Working Capital / Total Assets 0.49 1.20 0.59
B – Retained Earnings / Total Assets 0.16 1.40 0.23
C – EBIT / Total Assets 0.11 3.30 0.35
D – Market Value of Equity / Book Value of Total Liabilities 1.20 0.60 0.72
E – Sales / Total Assets 0.49 1.0 0.49
Z-Score 2.39

 

Formula: Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E
Explanation:

Z-Score is a statistical measurement that compare data points from different sets of data to find correlations. This measurement by Dr. Edward Altman is a significant measure in determining the financial strength of the company because it relies on different weighted financial liquidity and profitability metrics to come up with the overall score. This measure indicates the probability of bankruptcy.

Interpretation

The calculated Z-Score for Verizon Communications Inc was 2.39. According to Dr. Edward Altman that a grading scale of 1.8 to 3 indicates that the company will likely declare bankruptcy. 

Let us go back to the balance sheet analysis, it shows that current liabilities is greater than the current assets which indicates that the company’s current resources were not enough to meet its current obligations on time even all receivables are collected and inventories have been monetized. Financial leverage above also indicates that the company is at risk at the ratio of 5.0.

Hence, this measurement categorized the profitability or return on investment, liquidity, leverage and the efficiency in operating.

 

CITATION

https://www.sec.gov/cgi-bin/browse-edgar?CIK=VZ&owner=exclude&action=getcompany

https://www.verizon.com/about/

https://www.opensecrets.org/lobby/clientsum.php?id=D000000079&year=2019

Researched and written by Criselda

PayPal Holdings Inc (PYPL) Extended Graph Analysis

October 14th, 2019 Posted by Extended Analysis No Comment yet

PayPal is a technology platform company that enables digital and mobile payments on behalf of consumers and merchants worldwide. They provide online payment system that serves customers worldwide through their Payments Platform. 

PayPal2

PayPal is available globally in more than 200 markets with its PayPal platform, including Braintree, Venmo and Xoom, enables their consumers to receive money in more than 100 currencies, withdraw funds in 56 currencies and hold balances in their PayPal accounts in 25 currencies.

About PayPal

PayPal Holdings, Inc was incorporated in Delaware in January 2015 and was established in 1998. The company’s initial public offering was in February 2002, the offering was for $5.4 million shares at $13 per share, registered under Nasdaq with a ticker symbol PYPL. The valuation of PYPL was about $800 million during that time.  At the launch date the price per share closes at $20. It became a wholly owned subsidiary of eBay in 2015 and it was purchased at the amount of $1.5 billion.  

Founders:

  • Elon Musk
  • Peter Thiel
  • Yu Pan
  • Max Levchin
  • Ken Howery
  • Luke Nosek

Corporate Headquarters:

2211 North First Street

San Jose, California 95131

Worldwide Operations:

12312 Port Grace Boulevard

La Vista, Nebraska 68128

Subsidiaries:

  • Venmo
  • Xoom Corporation
  • Braintree
  • Tradera
  • Simility
  • Swift Financial LLC
  • iZettle
  • PayPal Singapore Private Ltd
  • Paydiant
  • Paypal Argentina SRL
  • And many more

PayPal Standard Graph Analysis

1. PYPL CASH FLOWS

CASH FLOWS PYPL(1)

2014 2015 2016 2017 2018 2019
Net cash provided by operating activities 2,220,000,000 2,546,000,000 3,158,000,000 2,531,000,000 5,483,000,000 8,005,000,000
Net cash used for investing activities -1,546,000,000 -6,389,000,000 -4,999,000,000 -5,358,000,000 840,000,000 -5,680,000,000
Net cash provided by (used for) financing activities -51,000,000 3,079,000,000 2,038,000,000 4,084,000,000 -1,262,000,000 1,778,000,000
Capital expenditure -492,000,000 -722,000,000 -669,000,000 -667,000,000 -823,000,000 -804,000,000
Free cash flow 1,728,000,000 1,824,000,000 2,489,000,000 1,864,000,000 4,660,000,000 7,201,000,000

Facts:

  • The net cash provided by operating activities was $8 billion in 2019 trailing twelve months.
  • Net cash used for investing activities was -$5.68 billion in 2019 trailing twelve months.
  • Net cash provided by (used for) financing activities was $1.78 billion in 2019 trailing twelve months.
  • Capital expenditure was -$804 million in 2019 trailing twelve months.
  • Free cash flow was $7.201 billion in 2019 trailing twelve months.

Explanation:

  • Net cash provided by operating activities had a growth of 261 percent in five years.
  • Net cash used for investing activities composed of sales/maturity of investment, purchases of investments, investment in property and equipment and acquisition and disposition.
  • There was repurchased of treasury stock in a significant amount at the net cash provided by (used for) financing activities.
  • Capital expenditure was the purchase of property and equipment.
  • Free cash flow has a growth of 317 percent in the last five years. 
  • Operating cash flow increased 46 percent which contributed to 55 percent increase in free cash flows from 2018 to the trailing twelve months.
  • There was a cash payment of $324 million for income taxes at the trailing twelve months.
  • Cash paid for interest was $88 million in the trailing twelve months.

Interpretation

PayPal was efficient in maintaining cash for the operation of the business year-over-year. The company is liquid in the last five years.

2. PYPL BALANCE SHEET

PYPL BALANCE SHEET

2014 2015 2016 2017 2018 2019
Total Cash 2,201,000,000 1,393,000,000 1,590,000,000 2,883,000,000 7,575,000,000 7,575,000,000
Total current assets 17,189,000,000 20,323,000,000 23,054,000,000 31,081,000,000 31,453,000,000 31,453,000,000
Total assets 21,917,000,000 28,881,000,000 33,103,000,000 40,774,000,000 43,332,000,000 43,332,000,000
Total current liabilities 13,312,000,000 13,649,000,000 16,942,000,000 22,946,000,000 25,965,000,000 25,965,000,000
Total liabilities 13,669,000,000 15,122,000,000 18,391,000,000 24,780,000,000 27,946,000,000 27,946,000,000
Equity 8,248,000,000 13,759,000,000 14,712,000,000 15,994,000,000 15,386,000,000 15,386,000,000
Retained earnings 0 668,000,000 2,069,000,000 3,823,000,000 5,880,000,000 5,880,000,000
Total Debt 1,479,000,000 0 0 1,000,000,000 1,998,000,000 1,998,000,000
Working Capital 4,282,000,000 7,031,000,000 8,855,000,000 9,782,000,000 7,059,000,000 7,059,000,000

Facts:

  • Total cash was $7.575 billion in 2018.
  • The total current assets was $31.453 billion in 2018.
  • The total assets was $43.332 billion in 2018.
  • Current liabilities was $25.965 billion in 2018.
  • Total liabilities was $27.946 billion in 2018.
  • The total stockholders equity was $15.386 billion in 2018.
  • Retained earnings was $5.880 billion in 2018.
  • Total debt was $1.998 in 2018.
  • Working capital was $7.059 billion in 2018.

Explanation

  • Total cash represents 17 percent of total assets.
  • Current assets represents 73 percent of the total assets.
  • Total assets has growth of 98 percent in five years.
  • Current liabilities represents 93 percent of total liabilities.
  • Total liabilities represents 64 percent of the total liabilities and stockholders equity.
  • Equity represent 36 percent of the total liabilities and stockholders equity.
  • Equity has grown 87 percent in five years.
  • Retained earnings represent 38 percent of equity.
  • Total debt was 7 percent of total liabilities.
  • Working capital grown 65 percent in five years

Interpretation

The company is liquid and is able to meet its short-term obligations using its current assets in due time. Moreover, PayPal is capable of paying its total liabilities using its total current assets.The company is solid and healthy.

3. PYPL FINANCIAL RATIOS

PYPL FINANCIAL RATIOS (1)

2014 2015 2016 2017 2018 2019
Asset Turnover (avg) 0.39 0.36 0.35 0.35 0.37 0.36
Return on Asset (ROA) % 2.04 4.83 4.52 4.86 4.89 5.57
Return on Equity (ROE) % 5.36 11.16 9.84 11.69 13.11 16.11
Financial Leverage (avg) 2.66 2.10 2.25 2.55 2.82 3.00
Return on Invested Capital % 4.47 11.16 9.84 10.98 11.51 13.50
Interest Coverage 31.86 32.64

Facts:

  • Asset turnover ratio was averaging 0.36 in 2019 trailing twelve months.
  • Return on Asset (ROA) was 5.57 in 2019 trailing twelve months.
  • Return on Equity (ROE) was 16.11 in the trailing twelve months.
  • Financial leverage was averaging 3.00 in the trailing twelve months.
  • Return on invested capital was 13.50 percent in the trailing twelve months.
  • Interest coverage was 32.64 in the trailing twelve months.

Explanation:

  • Asset turnover has a ratio of 0.36, which means that for every dollar in assets PayPal had generated 36 cents. It indicates that the company is not very efficient in using its assets.
  • The company has generally good return on assets. It indicates that for every dollar invested in assets it returns $0.056.
  • Return on equity shows that the company generated $0.16 of profit for every dollar of shareholders equity.
  • Financial leverage indicates that for every dollar of equity the company had $3 in total assets.
  • Return on invested capital indicates it yielded a return of 13.50 percent.
  • Interest coverage indicates that the company is making 32.64 times more earnings that the current interest payments. PayPal is capable of paying interest on the current debt together with its principal.

Interpretation

The financial ratios of PayPal is generally considered good. The company is capable of paying its debts in due period. PayPal is profitable.

 

4. INCOME AND MARKET

PYPL INCOME AND MARKET (1)

2014 2015 2016 2017 2018 2019
Sales 8,025,000,000 9,248,000,000 10,842,000,000 13,094,000,000 15,451,000,000 16,342,000,000
EBIT 5,139,000,000 6,148,000,000 7,287,000,000 9,053,000,000 10,840,000,000 11,425,000,000
Net Income 419,000,000 1,228,000,000 1,401,000,000 1,795,000,000 2,057,000,000 2,510,000,000
Market Capitalization 0 44,240,000,000 47,626,000,000 88,485,000,000 98,722,000,000 121,892,000,000
Intrinsic Value 0 0 62,390,247,604 84,693,420,726 93,632,594,216 164,111,456,295

Facts:

  • Total sales was $16.3 billion in 2019 trailing twelve months.
  • EBIT was $11.4 billion in 2019 trailing twelve months.
  • Net income was $2.5 billion in 2019 trailing twelve months.
  • Market capitalization was $121.892 billion in 2019 trailing twelve months.
  • Intrinsic value was $164 billion in 2019 trailing twelve months.

Explanation:

  • Sales has grown 104 percent in five years.
  • Sales increases year-over-year at an average rate of 15 percent.
  • EBIT has grown 122 percent in five years.
  • Net income has a growth of 499 percent in five years.
  • Net income increases year-over-year at an average rate of 54 percent.
  • Market capitalization had increased 176 percent in five years.
  • Intrinsic value soared 924 percent in four years.
  • Intrinsic value was higher by 35 percent than the market value.

Interpretation

PayPal Holdings Inc was profitable and the bottomline was impressive and increases year-over-year.

5. KEY EXECUTIVE COMPENSATION

PYPL TOTAL EXECUTIVE COMPENSATION

DATA:

2014 81,170,000
2015 64,220,000
2016 46,240,000
2017 68,010,000
2018 74,741,987

Facts:

  • 2014 total executive compensation was $81.170 million.
  • 2015 total executive compensation was $64.220 million.
  • 2016 total executive compensation was $46.240 million.
  • 2017 total executive compensation was $68.010 million.
  • 2018 total executive compensation was $74.742 million.

Explanation:

  • 2014 total executive compensation represents 19.37 percent of net income.
  • 2015 total executive compensation represents 5.23 percent of net income.
  • 2016 total executive compensation represents 3.30 percent of net income.
  • 2017 total executive compensation represents 3.79 percent of net income.
  • 2018 total executive compensation represents 3.63 percent of net income.

Interpretation

Total executive compensation in 2018 increased by 9.89 percent from 2017.

PYPL Key Executive Compensation

2014 2015 2016 2017 2018
Key Executive Compensation 70,066,841 39,175,128 40,764,728 68,013,476 74,741,987
Daniel H Schulman, President and CEO 38,687,906 14,444,491 18,934,341 19,218,634 37,764,588
John D. Rainey/CFO and EVP, Global Customer Operation 0 10,682,546 9,934,708 8,631,687 9,524,190
William J. Ready, EVP and COO 31,378,935 2,558,955 6,158,155 26,188,353 9,524,190
Louise Pentland, EVP, Chief Business Affairs and Legal Officer 0 11,489,136 5,737,524 6,574,969 9,516,978
Gary Marino, Former EVP and Chief Commercial Officer 0 0 0 7,399,833 8,412,041

Facts:

  • Total key executive compensation was $74.74 million in 2018.
  • Daniel H. Schulman, President and CEO compensation was $37.76 million in 2018.
  • David D. Reiney, CFO compensation was $9.52 million in 2018.
  • William J. Reidey, EVP and COO compensation was $9.52 million in 2018.
  • Louise Pentland, EVP Chief Business Affairs and Legal Officer compensation was $9.52 million in 2018.
  • Gary Marino, former EVP and Chief Commercial Officer compensation was $8.4 million in 2018.

Explanation

  • The total key executive compensation represents 3 percent of net income in 2018.
  • Daniel H. Schulman total compensation represent 51 percent of the total key executive compensation in 2018.
  • David D. Reiney total compensation represent 13 percent of the total key executive compensation.
  • William Reidey total compensation represent 13 percent of the total key executive compensation.
  • Louise Pentland total compensation represent 13 percent of the total key executive compensation in 2018.
  • Gary Marino total compensation represent 11 percent of the total key executive compensation in 2018.

Interpretation

PayPal’s highest paid executive was Daniel H. Schulman, President and CEO with 51 percent of the total key executive compensation.

6. LOBBYING AND CONTRIBUTIONS

PYPL LOBBING AND CONTRIBUTIONS

2001 2002 2003 2015 2016 2017 2018 2019
80,000 515,000 60,000 380,000 958,460 887,850 819,800 432,210

Facts:

  • Lobbying in 2001 was $80k.
  • Lobbying in 2002 was $515k.
  • The lobbying in 2003 was $60k.
  • In 2015, the lobbying was $380k.
  • In 2016, the lobbying was $958.46k.
  • The lobbying in 2017 was $887.85k.
  • 2018 lobbying was $819.80 million.
  • 2019 lobbying was $432.21 million.

Explanation

PayPal is incurring a lobbying expenses since 2001, and it was not reported in the financial statement. The lobbying expenses come from the Senate Office of Public Records. The data for the most recent years was downloaded on September 19, 2019.

 

7. FINANCIAL STRENGTH

PYPL FINANCIAL STRENGTH (1)

DATA

Working Capital $7,059,000,000
Total Assets $43,332,000,000
Sales $16,342,000,000
EBIT $11,425,000,000
Market value of equity $119,527,000,000
Book value of total liabilities $27,946,000,000
Retained earnings $5,880,000,000


CALCULATION

RATIO SCORE RESULT
A Working Capital/Total Assets 0.16 1.20 0.20
B Retained Earnings/Total Assets 0.14 1.40 0.19
C EBIT/Total Assets 0.26 3.30 0.87
D Market value of equity/Book value of total assets 0.55 0.60 2.57
E Sales/Total Assets 0.38 1.00 0.38
Z-Score 4.20

Formula: Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E

Explanation

Z-Score is a statistical measurement that compare data points from different sets of data to find correlations. This measurement by Dr. Edward Altman is a significant measure in determining the financial strength of the company because it relies on different weighted financial liquidity and profitability metrics to come up with the overall score. This measure indicates the probability of bankruptcy.

Interpretation

The overall Z-Score was 4.20, the grading scale for 3.00+ according to Altman indicates that the company will not declare bankruptcy. This measurement is not calculated for the purpose of estimating the company will declare bankruptcy but it helps in comparing other companies that have become insolvent.

CONCLUSION

The cash flows indicates that the company is liquid and the management is efficient in providing cash for the normal operation of the business. Moreover, the balance sheet is stable and income statement shows that PayPal is profitable and has not seen negative bottom line in the last five years. Therefore, the stock of PayPal is good for a Buy.

CITATION

https://www.sec.gov/cgi-bin/browse-edgar?CIK=PYPL&owner=exclude&action=getcompany&Find=Search

https://investor.paypal-corp.com/investor-relations

https://www.morningstar.com/stocks/xnas/pypl/quote
Researched and written by Criselda

Twitter: criseldarome

 

STARBUCKS CORP (SBUX) Extended Graph Analysis

October 8th, 2019 Posted by Extended Analysis No Comment yet

SBUX

COMPANY PROFILE

Starbucks Corp began in 1971. The company started in one store in Seattle’s Pike Market Place as a roaster and retailer of whole bean and ground coffee, tea, and spices. The business expanded globally and has millions of daily customers with exceptional products and more than 30,000 retail stores in 80 markets as of June 30, 2019.

Quoted from the company’s website: “ Starbucks is named after the first mate in Herman Melville’s Moby Dick. Their logo is also inspired by the sea, featuring a twin-tailed siren from Greek mythology.

The company’s mission: To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.

The company believed in serving the best coffee possible and its their goal that all their coffee to be grown in the highest standard of quality, using ethical sourcing practices.

 

STARBUCKS STANDARD GRAPH ANALYSIS 

1. SBUX CASH FLOWS

CASH FLOWS

 

2014-09 2015-09 2016-09 2017-09 2018-09 TTM
Net cash provided by operating activities 507,800,000 3,749,100,000 4,575,100,000 4,174,300,000 11,937,800,000 12,372,200,000
Net cash used for investing activities -817,700,000 -1,520,300,000 -2,222,900,000 -850,000,000 -2,361,500,000 -1,171,300,000
Net cash provided by (used for) financing activities -623,300,000 -2,256,500,000 -1,750,000,000 -3,001,600,000 -3,242,800,000 -8,297,900,000
Capital expenditure -1,160,900,000 -1,303,700,000 -1,440,300,000 -1,519,400,000 -1,976,400,000 -1,849,300,000
Free cash flow -553,100,000 2,445,400,000 3,134,800,000 2,654,900,000 9,961,400,000 10,522,900,000


Facts:

  • Net cash provided by operating activities was $12,372,200,000 in the trailing twelve months.
  • Net cash used for investing activities was -$1,171,300,000 in the trailing twelve months.
  • Net cash provided by (used for) financing activities was -$8,297,900,000 in the trailing twelve months.
  • Capital expenditure was -$1,849,300,000 in the trailing twelve months.
  • Free cash flows was $10,522,900,000 in the trailing twelve months.

Explanation

  • The company has managed to produce sufficient net cash provided by operating activities in the last five years. Year-over-year cash from operation increases, shows that the management was efficient in running the business.
  • Net cash used for investing activities consist of investment in properties and purchases of investments.
  • In cash flows from financing activities there was a debt issued in significant amount, and the company had repurchase common stock at $11 billion.
  • Capital expenditure consist of investment in property, plant and equipment.
  • Free cash flow increased 330 percent from 2015 to the trailing twelve months.

Interpretation

The company was efficient in providing sufficient cash from the operation and the cash increases year-over-year in the last five years. Further, Starbucks has enough cash for investing in property, plant and equipment, acquisition and purchases. 

2. SBUX BALANCE SHEET

BALANCE SHEET (1)

2014-09 2015-09 2016-09 2017-09 2018-09 2019-09
Total Cash 1,843,800,000 1,611,400,000 2,263,200,000 2,690,900,000 8,937,800,000 8,937,800,000
Total current assets 4,168,700,000 4,352,700,000 4,760,500,000 5,283,400,000 12,494,200,000 12,494,200,000
Total assets 10,752,900,000 12,446,100,000 14,329,500,000 14,365,600,000 24,156,400,000 24,156,400,000
Total current liabilities 3,038,700,000 3,653,500,000 4,546,900,000 4,220,700,000 5,684,200,000 5,684,200,000
Total liabilities 5,480,900,000 6,628,100,000 8,445,500,000 8,915,500,000 22,986,900,000 22,986,900,000
Equity 5,272,000,000 5,818,000,000 5,884,000,000 5,450,100,000 1,169,500,000 1,169,500,000
Retained earnings 5,206,600,000 5,974,800,000 5,949,800,000 5,563,200,000 1,457,400,000 1,457,400,000
Total Debt 2,048,300,000 2,347,500,000 3,202,600,000 3,932,600,000 9,440,100,000 9,440,100,000
Working Capital 1,130,000,000 699,000,000 213,000,000 1,063,000,000 6,810,000,000 6,810,000,000

Facts: 

  • Total cash was $8.9 billion in 2018 and the trailing twelve months.
  • Total current assets was $12.49 billion in 2018 and the trailing twelve months.
  • Total assets was $24.16 billion in 2018 and the trailing twelve months.
  • Total current liabilities was $5.68 billion in 2018 and the trailing twelve months.
  • Total liabilities was $22.99 billion in 2018 and the trailing twelve months.
  • Equity was $1.17 billion in 2018 and the trailing twelve months.
  • Retained earnings was $1.46 billion in 2018 and the trailing twelve months.
  • Total debt was $9.44 billion in 2018 and the trailing twelve months.
  • Working capital was $6.8 billion in 2018 and the trailing twelve months.

Explanation

  • Total cash has a growth of 385 percent in five years
  • Total current assets has a growth of 200 percent in five years.
  • Total assets has a growth of 125 percent in five years.
  • Total current liabilities represent 25 percent of total liabilities.
  • Total liabilities represent 95 percent of total liabilities and stockholders equity. 
  • Equity has a negative growth of 78 percent in five years.
  • Retained earnings has a negative growth of 72 percent in 5 years.
  • Total debt had increased 361 percent in five years.
  • Working capital had increased 503 percent in five years and it represents 41 percent of total liabilities.

Interpretation

Starbucks has a strong balance sheet and is liquid. Its total cash alone is sufficient in paying its current liabilities. However, the balance sheet shows that Starbucks is highly leveraged at 95 percent. The company is using debt in financing its growth which is very dangerous and might lead to bankruptcy in the future.

3. SBUX FINANCIAL RATIOS

FINANCIAL RATIOS

2014 2015 2016 2017 2018 TTM
Asset Turnover (avg) 1.48 1.65 1.59 1.56 1.28 1.37
Return on Asset (ROA) 18.57 23.77 21.05 20.11 23.46 18.66
Return on Equity (ROE) 42.41 49.73 48.16 50.90 136.51 136.51
Financial Leverage (avg) 2.04 2.14 2.44 2.64 20.66 20.66
Return on Invested Capital % 30.79 35.86 31.02 29.92 44.26 44.26
Interest Coverage 50.29 56.36 52.64 47.68 34.94 15.69


Facts:

  • Asset Turnover was averaging 1.37 in the trailing twelve months.
  • Return on assets was 18.66 percent in the trailing twelve months.
  • Return on equity was 136.51 percent in the trailing twelve months.
  • Financial leverage was average 20.66 ratio in the trailing twelve months.
  • Return on invested capital was 44.26 percent in the trailing twelve months.
  • Interest coverage was 15.69 ratio in the trailing twelve months.

Explanation

  • Asset turnover ratio indicates that for every dollar in asset, it generated $1.37 in sales.
  • Return on assets tells us that every dollar that is invested in asset produced 19 cents of income.
  • Return on equity shows that for every dollar invested in equity, it produced $1.37 income. ROE jumps 136 percent from 2017 to 2018.
  • Financial leverage tells us that for every dollar in equity, the firm has $20.66 of total assets. The ratio soared up to 683 percent from 2017 to 2018.
  • The company is generating a 44 percent return on invested capital.
  • Interest coverage tells us that the company is making more than enough money to pay its interest obligation with extra earnings left to pay for the principal. 

Interpretation

The financial ratio of Starbucks were impressive, however, return on equity soared 136 percent due to decreased in equity by 79 percent during the same period. Another thing is, the financial leverage is too high which indicates that the operation of the business start to get risky. The company is operating its business in a borrowed funds, which means the creditors has more stakes than the investors. 

4. INCOME AND MARKET

SBUX INCOME AND MARKET

2014-09 2015-09 2016-09 2017-09 2018-09 TTM
Sales 16,447,800,000 19,162,700,000 21,315,900,000 22,386,800,000 24,719,500,000 26,065,200,000
EBIT 2,792,600,000 3,351,100,000 3,853,700,000 3,896,800,000 3,806,500,000 3,826,300,000
Net Income 2,068,100,000 2,757,400,000 2,817,700,000 2,884,700,000 4,518,300,000 3,551,900,000
Market Capitalization 61,570,000,000 89,181,000,000 80,899,000,000 81,094,000,000 80,069,000,000 105,839,000,000
Intrinsic Value 88,446,601,523 99,655,021,787 87,118,974,412 89,719,054,322 185,689,850,736 185,689,850,736


Facts:

  • Sales was $26 billion in the trailing twelve months.
  • EBIT was $3.8 billion in the trailing twelve months.
  • Net income was $3.55 billion in the trailing twelve months.
  • Market capitalization was $105.839 billion in the trailing twelve months.
  • Intrinsic value was $185.69 billion 2018.

Explanation

  • The sales increases year-over-year in the past five years and has a growth of 58 percent..
  • EBIT was stable and has a growth of 37 percent in five years.
  • Net income growth was 72 percent in five years.
  • Market capitalization  growth was 72 percent in five years.
  • Intrinsic value increased 110 percent from 2014 to 2018. 

Explanation

The earnings of the company is running smoothly from top to bottom in five years, the current true value soared impressively in the last five years.

 

5. KEY EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

2014 2015 2016 2017 2018
Key Executive Compensation 37,652,142 40,913,970 47,469,559 45,955,484 70,184,613
Kevin R. Johnson/President and Chief Executive Officer, Financial Officer 0 8,474,173 11,057,912 11,480,364 13,382,480
Scott H. Maw/Former Executive VP and CFO 2,215,390 3,654,372 4,385,431 5,761,602 5,980,769
Howard Schultz/Former Executive Chairman of the Board 21,466,454 20,091,353 21,815,498 17,980,890 30,181,610
Rosalind G. Brewere/Group President, Americas and COO 0 0 0 0 9,152,082
John Culver/Group President, International Channel Development and Global Coffee and Tea 6,332,919 3,836,988 5,244,124 5,366,864 5,907,186
Clifford Burrows/Group President, Siren Retail 7,637,379 4,857,084 4,966,594 5,365,764 5,580,486

Facts

  • The total key executive compensation in 2018 was $70.18 million.
  • Kevin R. Johnson, CEO and Financial Officer compensation was $13.38 million in 2018.
  • Scott H Maw, former EVP and CEO compensation in 2018 was $5.981 million.
  • Howard Schultz, former Executive Chairman of the Board compensation was $30.18 million in 2018.
  • Rosalind Brewer, Group President Americas and COO compensation was $9.15 million in 2018.
  • John Calver, Group President International Channel Development and Global Coffee and Tea compensation was $5.91 million in 2018.
  • Clifford Burrows, Group President Siren Retail compensation was $5.58 million in 2018.

Explanation

  • The key executive compensation is composed of the following breakdown:
    • Salary $4.873 million
    • Bonus                                     $0.334 million
    • Restricted Stock Award        $30.959 million
    • Securities option                  $28.364 million
    • Non-equity compensation    $ 5.031 million
    • Other compensation            $ 0.623 million
  • Kevin R. Johnson compensation represent 19 percent of the total key executive compensation in 2018.
  • Scott H Maw compensation represent 8.5 percent of the total key executive compensation in 2018.
  • Howard Schultz compensation represent 43 percent of the total key executive compensation.
  • Rosalind Brewer compensation represent 43 percent of the total key executive compensation in 2018.
  • John Calver compensation represent 8.42 percent of the total key executive compensation in 2018.
  • Clifford Burrows compensation represent 8 percent of the total key executive compensation.

Interpretation

The total key executive compensation represent 1.55 percent of the net income. Salary has only 7 percent of the total executive compensation, restricted stock award and securities options have a big chunk of the total compensation.

6. LOBBYING AND CONTRIBUTIONS

STARBUCKS LOBBYING AND CONTRIBUTIONS

2004 2005 2006 2007 2008 2009 2010 2011
120,000 200,000 280,000 390,000 638,000 530,000 730,000 580,000

 

2012 2013 2014 2015 2016 2017 2018 2019
490,000 2,190,000 460,000 780,000 810,000 990,000 1,060,000 510,000

Facts:

  • Lobbying in 2004 amounted to $120k.
  • Lobbying in 2005 amounted to $200k.
  • 2006 lobbying amounted to $280k.
  • 2007 lobbying amounted to $390k.
  • 2008 lobbying amounted to $638k.
  • 2009 lobbying amounted to $530k.
  • 2010 lobbying amounted to $730k.
  • 2011 lobbying amounted to $580k.
  • 2012 lobbying amounted to $490k.
  • 2013 lobbying amounted to $2,190M.
  • 2014 lobbying amounted to $460k
  • 2015 lobbying amounted to $780k.
  • 2016 lobbying amounted to $810k.
  • 2017 lobbying amounted to $990k.
  • 2018 lobbying amounted to $1,060M.
  • 2019 lobbying amounted to $510k.

Explanation

Starbucks is incurring a yearly lobbying and contributions since 1998. The lobbying expenses come from the Senate Office of Public Records. The data for the most recent years was downloaded on September 19, 2019.

7. FINANCIAL STRENGTH

FINANCIAL STRENGTH

DATA:

Working Capital $6,810,000,000
Total Assets $24,156,400,000
Sales $26,065,200,000
EBIT $2,826,300,000
Market value of equity $105,839,000,000
Book value of total liabilities $22,986,900,000
Retained Earnings $1,457,400,000


CALCULATION

RATIO SCORE Z-SCORE
A Working Capital/Total Assets  0.28 1.2 0.336
B Retained Earnings/Total Assets 0.06 1.4 0.084
C EBIT/Total Assets 0.12 3.3 0.396
D Market value of equity/Book value of total assets 4.6 0.60 2.76
E Sales/Total Assets 1.08 1.00 1.08
Z-Score 4.656

Formula: Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E

Explanation

Z-Score is a statistical measurement that compare data points from different sets of data to find correlations. This measurement by Dr. Edward Altman is a significant measure in determining the financial strength of the company because it relies on different weighted financial liquidity and profitability metrics to come up with the overall score. This measure indicates the probability of bankruptcy.

Interpretation

The overall score was 4.656, the grading scale for the score 3 and above indicates the company will not declare bankruptcy, in other words, Starbucks is not close to bankruptcy and the business is doing well with its operation.

Conclusion

The company has a strong balance sheet and is liquid. Profitability shows that the company produces earnings sufficient for the operation. Starbucks is good in handling and in using the borrowed funds in the operation of the business. However, the stock of Starbucks Corp is not recommended for a Buy due to its high level of total liabilities than the investors equity which can be a very risky operation.

Citation

https://www.sec.gov/cgi-bin/browse-edgar?CIK=SBUX&owner=exclude&action=getcompany&Find=Search

https://www.opensecrets.org/orgs/lobby.php?id=D000037780

Researched and written by Criselda

Twitter: criseldarome 

 

Note:

Research Reports can be found under the company tab.