Team Week 3 Paper - 90 Relative Performance Analysis...

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90 Relative Performance Analysis FIN/402
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Introduction: The overall performance of a stock or bond can be measured in many different ways. Identifying the industry of the stock or bond and comparing it to other like companies and securities can be a useful tool. This will show how the security compares within its industry, giving more of an apple to apples approach. Along with the industry, looking at the stock or bond over a period of time can help with the comparisons. This will give insight into the strength of an industry as a whole as well as the strength of a specific stock within that industry. For the purposes of Team A’s portfolio there will be a comparison of securities and their 5 year rate of return as to the industr ies 5 year rate of return. These comparisons will help to show the strength of the industries chosen to be represented in Team A’s portfolio as well as the strength of Team A’s Stocks their respective industries ? . This information will help to show Team A if their portfolio is well diverse and established for growth potential or if changes need to be made either to the stock itself or the industry as a whole. Walt Disney World: Walt Disney World is a diversified organization. This organization s primary focus is on the entertainment and leisure sector of the economy. Walt Disney World, as a sizeable conglomerate, participates in five primary business segments including: media networks, parks and resorts, studio entertainment, consumer products, and interactive media ("Walt Disney World Annual Report 2010"). The Company evaluates the individual performance of each of its operating segments separately. Management uses a combined segmental operating income to evaluate the performance of the firm as an entity. Some of Disney’s competitors in the entertainment and leisure category include: CBS, Carnival Cruise Lines, and Marriott International.
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This comparison should provide investor information regarding each individual securities rate of return annually, followed by a five-year average return for each member of this specific grouping. The obvious choice of Standard and Poor’s Entertainment and Leisure Index would have been the obvious choice for comparison; however, it was discontinued in January 2002 (Did you contact the UoP Librarian?) ("Walt Disney World Annual Report 2010"). Therefore, to compensate for this challenge, included are the individual share prices, dividends, and rates of return for some of the stocks previously included in that index group. The included stocks should also provide a representative sample of the primary lines of business that Walt Disney World participates in. The Walt Disney Company is clearly not at the top of this business sector but has provided a respectable return over the five-year period. In contrast, CBS is the top contender for returns of the five securities examine in this grouping. However, it is also the most volatile of the group with returns ranging from 166% to (66.06) %. Within these rankings, Walt Disney World has provided a much more stable range of returns over the same period.
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