Company Analysis: Time Warner Cable Inc, Amazon.com Inc, and Tyson Foods Inc - Essay Example

Company Analysis of Question Company history Time Warner Cable Inc is an American telecommunication cable company that was founded in 1989. It connects fifteen million customers from its more than thirty one divisions which are operated in the twenty nine states of America. The company boasts of employing more than fifty one thousand people in the United States (Time Warner Cable Inc, 2013). The company works on its mission statement of ‘enjoy better’ to provide high class services to its customers. Founded in 1935, Tyson Foods Inc is an American multinational company that operates in World food industry. It is both the largest meat producer and the second largest processor and food production company in the world. The company works with more than seven thousand independent chicken growers and employs one hundred and ten thousand workers in its four hundred facilities and offices. It operates in more than ninety countries and hopes to be the best source of food for hotels and households. The company’s core value is also to create value for its customers, shareholders and employees. Amazon.com Inc has its headquarters in Seattle, Washington and is the largest online commerce company in the world. It was founded in 1994, by Jeff Bezos, as a bookstore and has expanded to be a multinational company that sells so many products such as electronics, clothes car accessories among other products. The company has used its mission of being the largest web store to include other products such as kindle and cloud space in its portfolio. Question 2: Products Time Warner Cable Inc sells TV and basic internet, triple basic, triple play, triple with turbo, digital TV and turbo, basic TV and turbo, internet, phone and intelligent-home. Its products are packaged according to the level and type of usage by customers for example they have the packages for residential homes and offices. The company always works to develop new and state of art products such as the intelligent-home that enable customers to save power and control what happens in his / her home without necessarily being at the house. Amazon.com has partnered with sellers and manufactures such as Dell, HP and publishers who sell their products through its web store. It also has an option for individuals to sell second hand products and products which they don’t use. Amazon products are divided into physical products such as clothes, electronics and furniture and digital products such as ebooks, cloud storage and music. It has developed the kindle where customers can read books, listen to music and share on social media, the cloud store for storing digital products and lately a subscription service for movies and TV lovers (Amazon.com, 2013). Tyson Foods Inc products are categorized into fresh products, frozen products, refrigerated products and shelf products. The products are packed into sachets of different sizes for the convenience of customers. Tyson Foods Inc has worked to produce products that are raw and those that are ready to eat. Their research and development departments have come up with new products such as Mini Chicken Sandwiches, Tyson Crispy Chicken Strips, Tyson Fun Nuggets with Calcium, Grilled & Ready Honey BBQ Chicken Breast Strips and Any’tizers Snacks. They’ve also created new recipes and cooking tips on their website. Question 3: Competition Amazon.com, Tyson Foods Inc and Time Warner Cable operate in perfect competition markets. The markets are characterized by many sellers and buyers, free and exit of competitors and prices are set by the market. Firms in these markets may get advantages from their sizes and geographical distributions. All the three companies are multinational who face difficulty in operating in some countries due to government rules and regulations of the different countries and presence of small competitors who are more trusted in their locations of operations. Although the uptake of products from these companies is on the rise, the companies face extra cost for distribution and marketing. Question 5: Company Operations Time Warner Cable shares are traded at New York Stock Exchange (NYSE). It has merged with several companies such as ATC in 1992. It also acquired NewWave Communications Cable in 2011 to enable it use ‘cloud’ services and Insight Communications in 2012 which enabled it to spread its distribution of services and acquisition of new customers who were previously loyal to those companies. Since its inception, Amazon.com has acquired some companies such as PlanetAll, Internet Movie Database (IMDb), Alexa Internet, Exchange.com, Accept.com, CDNow. Joyo.com, BookSurge, Shopbop, dpreview.com, Audible.com, Touchco and Zappos. In 2011, it acquired LoveFilm a company that enables customers to subscribe movies and television series. It also acquired Kiva Systems, Teachstreet and Evi in 2012 and IVONA Software and GoodReads in 2013. GoodReads Company brought a new feature, to Amazon.com, which allows customers to see what his / her friends has read and also make recommendations. Tyson Foods Inc has not had any acquisition or merger in the period of our tracking although it acquired IBP Inc the largest beef packer in United States. It also acquired other companies such as Garrett poultry, Lane Processing, Hudson Foods Company, Wright Brand Foods Inc, Prospect Farms, Ocoma Foods, Franz Foods and Honeybear Foods. Tyson Foods is traded at the New York Stock Exchange while Amazon.com is traded at the NASDAQ. Question 4 and Question 6: Company Analysis Time Warner Cable stock prices have been on the rises since 2007. It is ranked 11th based on market capitalization, 6th based on return on equity and 7th based on revenue growth as shown in table 2. Investors of Time Warner Cable Inc get a price earnings ratio of 13.23 which is the smallest among the top seven competitors. Table 1: Comparison of Time Warner Cable and some of its competitors Company Price Market Capitalization P/E British Sky Broadcasting Group plc 839.5 13.63B 1485.84 Virgin Media Inc 3204.0 8.63B 366.3 Comcast Corporation (MX) 507.71 1.34T 222.68 Comcast Corporation 40.56 107.06B 17.79 DISHTV India Limited 70.0 74.45B N/A Time Warner Cable Inc 91.28 26.97B 13.23 Source: Yahoo Finance Table 2: Comparison of Time Warner Cable and industry leaders TWC vs. Industry Leaders Statistic Industry Leader TWC TWC Rank Market Capitalization British Sky Broadcasting Group plc 13.63B 26.97B 11 / 45 P/E Ratio (ttm) British Sky Broadcasting Group plc 1,485.84 13.23 17 / 45 PEG Ratio (ttm, 5 yr expected) SJR 4.04 1.06 10 / 45 Revenue Growth (Qtrly YoY) WWIL.BO 35.30% 9.90% 7 / 45 EPS Growth (Qtrly YoY) CABLECPO.MX N/A -4.40% 14 / 45 Long-Term Growth Rate (5 yr) Virgin Media Inc 107.85% 13.04% 14 / 45 Return on Equity (ttm) Virgin Media Inc 150.28% 29.14% 6 / 45 Long-Term Debt/Equity (mrq) 370.589 N/A Dividend Yield (annual) SJR 4.40% 2.80% 3 / 45 Source: Yahoo Finance Table 3: Comparison of Amazon.com Inc and some of its competitors Company Price Market Capitalization P/E Amazon.com Inc 260.32 118.33B N/A eBay Inc 52.39 67,85B 25.43 Liberty Interactive Corporation 20.06 10.87B 7.22 Mercadolibre Inc 91.90 4.06B 40.22 Liquidity Services Inc 32.12 1.01B 23.14 Overstock.com Inc 18.73 441.9M 22.81 Source: Yahoo Finance Amazon.com stock has been performing very well in 2007, 2008, 2009, 2010, 2011 and 2012. This has been attributed to the acquisitions it made during these periods. The acquisitions have also made it to be the largest, at 118.33 billion dollars, based on market capitalization with a 22.00% growth in revenue. Even though Amazon.com has a large market capitalization, its return on equity is relative low at –0.49%. Table 4: Comparison of Amazon.com Inc and industry leaders AMZN vs. Industry Leaders Statistic Industry Leader AMZN AMZN Rank Market Capitalization Amazon.com Inc 118.33B - 1 / 17 P/E Ratio (ttm) Mercadolibre Inc 40.22 N/A N/A PEG Ratio (ttm, 5 yr expected) Overstock.com Inc 7.13 4.68 2 / 17 Revenue Growth (Qtrly YoY) DANG 31.10% 22.00% 3 / 17 EPS Growth (Qtrly YoY) Liberty Interactive Corporation 364.00% -44.90% 8 / 17 Long-Term Growth Rate (5 yr) ATV 50.00% 37.69% 2 / 17 Return on Equity (ttm) Overstock.com Inc 72.33% -0.49% 8 / 17 Long-Term Debt/Equity (mrq) 53.528 N/A Dividend Yield (annual) Mercadolibre Inc 0.60% N/A N/A Source: Yahoo Finance Table 5: Comparison of Tyson Foods Inc and some of its competitors Company Price Market Capitalization P/E BRF – Brasil Foods S.A 24.04 20.92B 52.37 Hormel Foods Corporation 41.21 10.92B 22.16 Tyson Foods Inc 24.08 8.54B 14.70 Leucadia National Corporation 29.05 7.11B 8.44 Smithfield Foods Inc 25,44 3.53B 16.65 Seaboard Corporation 2704.80 3.24B 11.53 Source: Yahoo Finance Table 5 and 6 shows the performance of Tyson Foods Inc. With a market capitalization of 8.54 billion dollars, it is the third largest company based on market capitalization and has a price earnings ratio of 14.7. It also gives a dividend yield of 0.80% which is the 4th best amongst industry leaders (Yahoo Finance 2013). Tyson Foods Inc shares have not been performing well since 2007with a decrease in prices in 2009 and a slight increase in share price in 2012. Table 6: Comparison of Tyson Foods Inc and industry leaders TSN vs. Industry Leaders Statistic Industry Leader TSN TSN Rank Market Capitalization BRF – Brasil Foods S.A 20.92B 8.54B 3 / 11 P/E Ratio (ttm) BRF – Brasil Foods S.A 52.37 14.70 4 / 11 PEG Ratio (ttm, 5 yr expected) Hormel Foods Corporation 1.85 1.34 2 / 11 Revenue Growth (Qtrly YoY) Leucadia National Corporation 920.00% 0.90% 9 / 11 EPS Growth (Qtrly YoY) BRF – Brasil Foods S.A 362.10% 14.30% 4 / 11 Long-Term Growth Rate (5 yr) BRF – Brasil Foods S.A 19.40% 8.50% 5 / 11 Return on Equity (ttm) BRID 24.62% 9.91% 7 / 11 Long-Term Debt/Equity (mrq) 40.046 N/A Dividend Yield (annual) Hormel Foods Corporation 1.70% 0.80% 4 / 11 Source: Yahoo Finance Question 7: Company Outlook Graph 1: Closing price for Time Warner Cable Inc shares Source: Author Graph 2: Closing price for Amazon.com shares Source: Author Graph 3: Closing price for Tyson Foods Inc shares Source: Author Graph 1, 2 and 3 shows the trend (movement) of closing price of shares of Time Warner Cable Inc, Amazon.com and Tyson Foods Inc respectively. From the graphs, we see that the closing price of Time Warner Cable Inc has decreased overtime. The closing price for Amazon.com has also decreased but its movement is more volatile. The volatility shows that Amazon.com shares are more risky than the shares of Time Warner Cable Inc and Tyson Foods Inc (Kreps, 1990). The graph also shows that the closing share price of Tyson Foods Inc is slightly increasing over time. This shows that Tyson Foods Inc shares are more attractive to investor as can be seen by the increase in value of shares over time (Booth, Colombo & Williams, 2008). I would recommend that investors should buy Tyson Foods Inc shares, sell Amazon,com Inc shares and hold Time Warner Cable Inc shares because its shows a tendency of increase in price in future. References Amazon.com (April 22, 2013). Retrieved from http://www.amazon.com/ Booth, W. Colombo, G. and Williams J. (2008). The craft of research. Chicago: University of Chicago Press. Kreps, D. (1990). A course in Microeconomics Theory. Princeton: Princeton University Press, Time Warner Cable (April 22, 2013). Retrieved from http://www.timewarnercable.com/ Yahoo Finance (April 22, 2013). Retrieved from http://uk.finance.yahoo.com/ Read More