Commonwealth Bank of Australia (CBA)

The company paid a dividend of $4.2, $4.29, and $4.31 in 2016, 2017, and 2018 respectively. The return on equity in the same period for the company was 16.1%, 15.7%, and 14.1% (Annual Report, 2018). The company reported ROA of 0.92% in 2018. In 2017 and 2018, CBA reported earnings per share of $0.563 and $0.528 (Annual Report, 2018). The net income for the bank in 2018 was $9399M, which is an improvement compared with $9233M reported in 2017 (Annual Report, 2018). The assets of the firm return 0.92% in 2018 and the net margin of 37.72%. CBA stock beta is 0.91 (Finance.yahoo.com, 2019).

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Order now

CSL Limited

The company paid total dividends of $1.72 in 2018 (Annual Report, 2018). Earnings per share reported by CSL in 2018 were $0.350 and a return on equity of 25% in the same year. In 2018, the corporation net income amounted to $1661.60 which is an increase compared with the net income reported in 2017 of $1510.40. Stock beta for CSL Limited stands at 1.11. The return on assets and the net margin of the company in 2018 were 19.60% and 22.94%. Quick and the current ratios are 1.44 and 2.39 respectively.

EDP Renovaveis

The company earned a net profit of EUR472M in 2018 which is a rise compared with 2017 net income of EUR456M (Annual Report, 2018). The P/E ration in 2018 for the firm was 15.65 while the EPS share in the same year was $0.1358. Similarly, EDP stock beta currently is 0.75 (www.reuters.com, 2019). The return on assets and ROE reported by the firm in 2018 was 3.91% and 7.91% respectively. The company reported a net margin of 37.63% in 2018 and EPS of $0.856 in 2018. The company paid out a dividend per share of $0.07 in 2018 denoting an improvement from 2017 of $0.06. Quick and the current ratio are 0.71 and 0.90 respectively.

Sky City Entertainment (SKC)

SKC reported DP and EPS of $0.2 and $0.254 respectively in 2018. Additionally, the net income in 2018 was $169.52M in 2018, showcasing an improvement compared with $44.86M net income reported in 2017 (Annual Report, 2018). The current stock beta for SKC is 1.24. The return on assets, return on equity, and net margin in 2018 was 6.63%, 14.33%, and 17.69% respectively. Price to earning ration in the same period was 18.28. Quick and the current ratios are 0.47 and 1.78 respectively (www.morningstar.com, 2019).

McDonald's Corporation (MCD)

The net income for the company in 2018 was $5924.3. EPS and DPS reported in the same period were $7.54 and $4.19 respectively (Annual Report, 2018). The quick and current ratios in 2018 are 1.27 and 1.47 respectively. ROA and the net margin in 2018 were 14.66% and 28.20% respectively. Stock beta for MCD is 0.33 (www.finance.yahoo.com, 2019).

Recommendation

The report analyses various micro fundamentals of each of the five companies in order to make an informed decision on the best stock to consider. McDonald's Corporation is the best stock in terms of the stock price because it has the highest stock price. In terms of the net income in the recent financial year 2018, CBA is the best. High profitability indicates that the firm is performing well and the management is efficient on generating returns for shareholders. Commonwealth Bank of Australia and McDonald's Corporation are the leading companies in terms of current paid dividend with CBA reporting a slightly higher DPS than MCD. EPS data shows that in 2018, MCD reported the highest amount out of the five firms which is significantly higher than the rest of the firms. EPS and DPS demonstrate returns that shareholders should expect from their investments and therefore the higher the return, the better the investment.

In terms of the return on assets, CSL has the highest ROA with MCD following. It indicates that the management of the two firms is putting the necessary effort to generate income for the company using the available assets. Stock beta is an indication of the stock volatility relative to the market performance. Various factors affect stock beta, such as the nature of the industry. In this case, MCD has the lowest stock beta followed by CBA. It demonstrates that MCD stock is less risky and not affected by market volatility. The analysis illustrates that MCD is the best company and is recommendable for investment. Micro fundamentals such as quick and the current ratios show that MCD is liquid and poses no threat to the sustainability of the business. The next option to consider is the CBA compared with the rest companies.

References

Annualreports.com. (2019). [online] Available at: http://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_MCD_2018.pdf [Accessed 7 Aug. 2019].

Anon, (2019). [online] Available at: https://www.csl.com/-/media/csl/documents/annual-report-docs/csl-ltd-annual-report-2018-full.pdf. [Accessed 7 Aug. 2019].Commbank.com.au. (2019). [online] Available at: https://www.commbank.com.au/content/dam/commbank/about-us/shareholders/pdfs/results/fy18/cba-annual-report-2018.pdf [Accessed 7 Aug. 2019].

Finance.yahoo.com. (2019). Yahoo is now part of Oath. [online] Available at: https://finance.yahoo.com/quote/MCD/ [Accessed 7 Aug. 2019].

Reuters.com. (2019)[online] U.S. Available at: https://www.reuters.com/finance/stocks/financial-highlights/EDPR.LS [Accessed 7 Aug. 2019].

SkyCity Entertainment Group Ltd (SKC) Financials | Morningstar (2019). [online] Morningstar.com. Available at: https://www.morningstar.com/stocks/xasx/skc/financials [Accessed 7 Aug. 2019].