Executive Summary
Background
In
today’s financial world, prospective investors constantly seek ways to quickly
and efficiently obtain information regarding the quality of various investment
opportunities. For years, the stock market has been one of the most common
sources of such investing. Often considered the father of modern financial
analysis, Benjamin Graham devised a list of ten “hurdles,” or benchmarks, by
which one could use to measure the overall quality of a stock to determine
whether it would be a good investment. Inspired by the class’s Fallen Angel
assignment, I created this project to test these hurdles when given a valid
ticker symbol for a publicly traded company.
For
reference, a list of Benjamin Graham’s Ten Hurdles is included below:
1. An earnings-to-price
yield at least twice the AAA bond rate.
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2. P/E ratio less than
40% of the highest P/E ratio the stock had over the past 5 years.
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3. Dividend yield of at
least 2/3 the AAA bond yield.
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4. Stock price below 2/3
of tangible book value per share.
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5. Stock price below 2/3
of Net Current Asset Value.
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6. Total debt less than
book value.
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7. Current ratio greater
than 2.
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8. Total debt less than 2
times Net Current Asset Value.
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9. Earnings growth of
prior 10 years at least at a 7% annual compound rate.
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10. Stability of growth
of earnings in that no more than 2 declines of 5% or more in year-end
earnings in the prior ten years are permissible.
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Solution Overview
This project
includes using a series of three web queries to effectively gather the data as
well as a user form to (1) allow the user to enter a valid stock ticker symbol,
(2) execute the web queries, and (3) display the results of the analysis. The
project essentially consisted of the following five parts: Part 1 automated a
web query for a particular stock provided by the user; Part 2 automated a query
that retrieved the latest AAA bond information; Part 3 consisted of a query
that retrieved a company’s most recent balance sheet line items; Part 4
analyzed the data from the three queries and used the results to determine
whether the stock passed the different hurdles; and Part 5 consisted of loading
that information into the user form and creating custom buttons on the ribbon
for the user’s convenience.
Excel Spreadsheet Link:
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