Business Analysis and Valuation企业分析和估价-arch_comm.docVIP

Arch Communications Systems Teaching Note The Arch Communications Systems case is designed for teaching security analysis and valuation. Arch is a paging company facing consolidation and technological changes in its industry. As a result of these concerns, investors were pessimistic about the company’s future, bidding its stock price down by approximately 50% around the time of the case. Several prominent analysts, however, suggested that the stock was undervalued. The case provides detailed description of Arch’ industry, its strategy, recent financial performance, and an industry analyst’s discounted cash flow valuation of Arch’s stock. Students are asked to evaluate the analyst’s valuation to identify its strengths and weaknesses. Then they are asked to prepare their own valuation analysis of the company’s stock. The case is meant to b taught in the valuation module of a financial statement analysis course. The valuation exercise raises several complex issues, so it is beast taught towards the end of the valuation module, after students have been exposed to the basic valuation concepts and applications. Assignment Questions Evaluate Arch’s industry and its strategic position vis-à-vis its major competitors. What does your analysis imply for Arch’s future investment requirements, and the company’s ability to earn profits greater than its cost of capital? Assess the John Adam’s valuation analysis presented in Exhibit 2 of the case. Are the forecasts consistent with your conclusions from question 1? If not, what modifications do you suggest? Arch’s stock was trading at $12.50 dollars at the time of the case. What assumptions are investors making about Arch’s future performance to justify the current stock price. Are these assumptions consistent with your analysis in question 1? What is your assessment of the intrinsic value of Arch’s stock at the time of the case? Reading Assignment Valuation Theory (Chapter 11) and Valuation Application (Chapter