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WHITBREAD
Table of Contents
Section A: Analysis of Share Price Behavior of the company......................................2
Market Return.......................................................................................................... 2
Standard Deviation of Market Return......................................................................3
Correlation of the Monthly Returns with Returns on the FTSE-100 index.................4
Portfolio................................................................................................................... 7
Section B: Investigation of the financial structure and the cost of capital of the
Whitbread................................................................................................................... 7
Systematic risk of Whitbread...................................................................................7
Cost of capital using Capital Asset Pricing Model (CAPM)........................................9
Price-to-earnings ratio of Whitbread & Interpretation.............................................9
Whitbread........................................................................................................... 10
Appropriateness of the companys choice of capital structure and its implications
for its market value from a stockholders points of view.......................................11
Capital Structure................................................................................................ 11
Interest coverage............................................................................................... 11
Section C: Concluding Remarks................................................................................12
References................................................................................................................ 13
Whitbread PLC
Date
1
5/1/2014
4/1/2014
3/3/2014
2/3/2014
1/1/2014
12/2/201
3
11/1/201
3
10/1/201
3
9/2/2013
6
7
1
0
1
1
1
2
1
3
1
4
1
5
1
6
8/1/2013
7/1/2013
6/3/2013
5/1/2013
4/1/2013
3/1/2013
2/1/2013
Retur Average
Differenc
n
Return
e
Square
0.00
%
3.00%
3.00%
0.000899
1.97
0.0024700
%
3.00%
4.97%
9
7.24
0.0104857
%
3.00%
10.24%
6
19.62
0.0276224
%
3.00% -16.62%
4
0.00
%
3.00%
3.00%
0.0009
5.16
0.0004665
%
3.00%
-2.16%
6
4.56
0.0002433
%
3.00%
-1.56%
6
15.82
0.0164352
%
3.00% -12.82%
4
3.77
0.0045832
%
3.00%
6.77%
9
4.64
0.0058369
%
3.00%
7.64%
6
5.69
0.0007236
%
3.00%
-2.69%
1
6.00
%
3.00%
-3.00%
0.0009
14.44
0.0130873
%
3.00% -11.44%
6
0.51
0.0012320
%
3.00%
3.51%
1
1.78
0.0001488
%
3.00%
1.22%
4
1.83
0.0023328
%
3.00%
4.83%
9
1
7
1
8
1
9
2
0
2
1
2
2
2
3
2
4
2
5
2
6
2
7
2
8
2
9
1/1/2013
12/3/201
2
11/1/201
2
10/1/201
2
9/3/2012
8/1/2012
7/2/2012
6/1/2012
5/1/2012
4/2/2012
3/1/2012
2/1/2012
1/2/2012
3
0
12/1/201
1
3
1
3
2
3
3
11/1/201
1
10/3/201
1
9/1/2011
3
4
8/1/2011
3
5
7/1/2011
3
6
3
7
6/1/2011
5/3/2011
5.03
%
2.00
%
2.90
%
3.62
%
6.48
%
0.28
%
5.33
%
8.86
%
1.53
%
4.50
%
8.66
%
3.22
%
5.12
%
4.87
%
0.78
%
5.70
%
5.18
%
3.21
%
3.65
%
0.98
%
0.93
3.00%
-2.03%
0.0004120
9
3.00%
1.00%
0.0001
3.00%
0.10%
1E-06
3.00%
-0.62%
3.00%
-3.48%
3.844E-05
0.0012110
4
3.00%
3.28%
3.00%
-2.33%
3.00%
-5.86%
1E-03
0.0005428
9
0.0034339
6
3.00%
4.53%
0.0020520
9
3.00%
-1.50%
3.00%
-5.66%
3.00%
-0.22%
3.00%
-2.12%
4.8E-06
0.0004494
4
3.00%
7.87%
0.0061936
9
3.00%
3.78%
0.0014288
4
3.00%
-2.70%
3.00%
-2.18%
0.000729
0.0004752
4
3.00%
6.21%
0.0038564
1
3.00%
6.65%
0.0044222
5
3.00%
3.00%
3.98%
3.93%
0.000225
0.0032035
6
0.0015840
4
0.0015444
9
3
8
3
9
4
0
4
1
4
2
4
3
4
4
4
5
4
6
4
7
4
8
4
9
5
0
5
1
5
2
5
3
5
4
5
5
5
6
5
7
5
4/1/2011
3/1/2011
2/1/2011
1/4/2011
12/1/201
0
11/1/201
0
10/1/201
0
9/1/2010
8/2/2010
7/1/2010
6/1/2010
5/3/2010
4/1/2010
3/1/2010
2/1/2010
1/4/2010
12/1/200
9
11/2/200
9
10/1/200
9
9/1/2009
8/3/2009
%
1.82
%
7.41
%
2.71
%
3.07
%
5.98
%
0.30
%
4.99
%
16.33
%
0.85
%
0.07
%
1.73
%
8.13
%
4.34
%
3.80
%
0.78
%
0.14
%
9.98
%
0.79
%
5.47
%
16.14
%
20.97
0.0001392
4
3.00%
1.18%
3.00%
10.41%
3.00%
0.29%
3.00%
6.07%
3.00%
-2.98%
3.00%
3.30%
3.00%
-1.99%
3.00%
-13.33%
0.001089
0.0003960
1
0.0177688
9
3.00%
3.85%
0.0014822
5
3.00%
3.07%
3.00%
1.27%
3.00%
11.13%
3.00%
-1.34%
3.00%
-0.80%
3.00%
2.22%
3.00%
3.14%
3.00%
-6.98%
3.00%
2.21%
3.00%
-2.47%
3.00%
3.00%
-13.14%
-17.97%
0.0108368
1
0.0000084
1
0.0036844
9
0.0008880
4
0.0009424
9
0.0001612
9
0.0123876
9
0.0001795
6
0.000064
0.0004928
4
0.0009859
6
0.0048720
4
0.0004884
1
0.0006100
9
0.0172659
6
0.0322920
8
5
9
7/1/2009
6
0
6/1/2009
%
6.00
%
5.44
%
9
3.00%
-3.00%
0.0009
3.00%
8.44%
0.0071233
6
Standard deviation
0.2364104
8
60
0.0040069
57
0.0633005
32
Excel check
0.0627709
41
Sample Size
Square Root
(yahoo finance,
2014)
5/1/201
4
4/1/201
4
3/3/201
4
2/3/201
4
1/1/201
4
12/2/20
13
11/1/20
13
Return
(Whitbread)
Return
(FTSE-100)
0.00%
0.27%
-1.97%
2.75%
-7.24%
Correlation
Sample size
(n)
Critical Region
10
-0.632 to +0.632
11
-0.602 to +0.602
-3.10%
12
-0.576 to +0.576
19.62%
4.60%
13
-0.553 to +0.533
0.00%
-3.54%
14
-0.532 to +0.532
15
-0.514 to +0.514
20
-0.444 to +0.444
5.16%
4.56%
0.5129
1.48% Sample
-1.20%
60
10/1/20
13
9/2/201
3
8/1/201
3
7/1/201
3
6/3/201
3
5/1/201
3
4/1/201
3
3/1/201
3
2/1/201
3
1/1/201
3
12/3/20
12
11/1/20
12
10/1/20
12
9/3/201
2
8/1/201
2
7/2/201
2
6/1/201
2
5/1/201
2
4/2/201
2
3/1/201
2
2/1/201
2
1/2/201
2
12/1/20
11
11/1/20
11
10/3/20
15.82%
4.17%
30
-0.361 to +0.361
-3.77%
0.77%
40
-0.312 to +0.312
-4.64%
-3.14%
60
-0.254 to +0.254
5.69%
6.53%
80
-0.220 to +0.220
6.00%
-5.58%
100
-0.197 to +0.197
14.44%
2.38%
120
-0.180 to +0.180
-0.51%
0.29%
140
-0.166 to +0.166
1.78%
0.80%
160
-0.155 to +0.155
-1.83%
1.34%
180
-0.146 to +0.146
5.03%
6.43%
200
-0.138 to +0.138
2.00%
0.53%
250
-0.124 to +0.124
2.90%
1.45%
300
-0.113 to +0.113
3.62%
0.71%
350
-0.105 to +0.105
6.48%
0.54%
400
-0.098 to +0.098
-0.28%
1.35%
450
-0.092 to +0.092
5.33%
1.15%
8.86%
4.70%
-1.53%
-7.27%
4.50%
-0.53%
8.66%
-1.75%
3.22%
3.34%
5.12%
1.96%
-4.87%
1.22%
-0.78%
5.70%
-0.70%
8.11%
11
9/1/201
1
8/1/201
1
7/1/201
1
6/1/201
1
5/3/201
1
4/1/201
1
3/1/201
1
2/1/201
1
1/4/201
1
12/1/20
10
11/1/20
10
10/1/20
10
9/1/201
0
8/2/201
0
7/1/201
0
6/1/201
0
5/3/201
0
4/1/201
0
3/1/201
0
2/1/201
0
1/4/201
0
12/1/20
09
11/2/20
09
10/1/20
09
5.18%
-4.93%
-3.21%
-7.23%
-3.65%
-2.19%
-0.98%
-0.74%
-0.93%
-1.32%
1.82%
2.73%
-7.41%
-1.42%
2.71%
2.24%
-3.07%
-0.63%
5.98%
6.72%
-0.30%
-2.59%
4.99%
2.28%
16.33%
6.19%
-0.85%
-0.62%
-0.07%
6.94%
1.73%
-5.23%
-8.13%
-6.57%
4.34%
-2.22%
3.80%
6.07%
0.78%
3.20%
-0.14%
-4.15%
9.98%
4.28%
0.79%
2.90%
5.47%
-1.74%
9/1/200
9
8/3/200
9
7/1/200
9
6/1/200
9
5/1/200
9
16.14%
4.58%
20.97%
6.52%
6.00%
8.45%
-5.44%
-3.82%
-5.51%
4.10%
Portfolio
Mont
h
1
2
3
4
Whitbread
Adjust
ed
Retur
Date
Close
n
0.00
5/1/2014
4033
%
1.97
4/1/2014
4033
%
4114.0 7.24
3/3/2014
6
%
4435.3 19.62
2/3/2014
1
%
1/1/2014
12/2/201
3
3707.7
9
3707.7
9
0.00
%
5.16
%
11/1/201
3
10/1/201
3
3525.9
1
3372.0
7
9/2/2013
2911.3
9
10
8/1/2013
11
12
7/1/2013
6/3/2013
4.56
%
15.82
%
3.77
%
4.64
%
5.69
%
6.00
%
5
6
7
8
3025.3
3
3172.6
7
3001.7
6
FTSE-100
Adjust
ed
Date
Close
5/1/2014
6798.6
4/1/2014
6780
3/3/2014
6598.4
2/3/2014
6809.7
1/1/2014
12/2/201
3
6510.4
11/1/201
3
10/1/201
3
6749.1
6650.6
6731.4
9/2/2013
6462.2
8/1/2013
6412.9
7/1/2013
6/3/2013
6621.1
6215.5
Retur
ns
0.27
%
2.75
%
3.10
%
4.60
%
3.54
%
1.48
%
1.20
%
4.17
%
0.77
%
3.14
%
6.53
%
5.58
Equity Beta
0.8403775
24
13
5/1/2013
14
4/1/2013
15
3/1/2013
16
2/1/2013
17
20
1/1/2013
12/3/201
2
11/1/201
2
10/1/201
2
21
9/3/2012
22
8/1/2012
23
7/2/2012
24
6/1/2012
2046.5
1
2052.2
8
1948.5
1
25
5/1/2012
1789.9
8
14.44
%
0.51
%
1.78
%
1.83
%
5.03
%
2.00
%
2.90
%
3.62
%
6.48
%
0.28
%
5.33
%
8.86
%
1.53
%
26
4/2/2012
1817.8
6
4.50
%
8.66
%
3.22
%
5.12
%
4.87
%
0.78
%
5.70
%
18
19
2831.8
3
2474.5
5
2487.1
4
2443.5
6
2489.0
8
2369.9
5
2323.4
6
2257.8
9
2179.1
1
27
3/1/2012
28
2/1/2012
29
1/2/2012
1739.5
6
1600.8
8
1550.8
9
30
12/1/201
1
1475.4
2
11/1/201
1
10/3/201
1
1550.8
9
1563.1
5
31
32
5/1/2013
6583.1
4/1/2013
6430.1
3/1/2013
6411.7
2/1/2013
6360.8
1/1/2013
12/3/201
2
11/1/201
2
10/1/201
2
6276.9
9/3/2012
5742.1
8/1/2012
5711.5
7/2/2012
5635.3
6/1/2012
5571.2
5/1/2012
5320.9
4/2/2012
5737.8
3/1/2012
5768.5
2/1/2012
5871.5
1/2/2012
5681.6
12/1/201
1
5572.3
11/1/201
1
10/3/201
1
5897.8
5866.8
5782.7
5505.4
5544.2
%
2.38
%
0.29
%
0.80
%
1.34
%
6.43
%
0.53
%
1.45
%
0.71
%
0.54
%
1.35
%
1.15
%
4.70
%
7.27
%
0.53
%
1.75
%
3.34
%
1.96
%
1.22
%
0.70
%
8.11
%
33
9/1/2011
1478.8
7
34
8/1/2011
1406.0
4
35
7/1/2011
1452.7
2
36
6/1/2011
1507.8
1
37
5/3/2011
38
4/1/2011
39
3/1/2011
40
2/1/2011
1509.5
9
1630.3
6
41
1/4/2011
12/1/201
0
1587.3
6
1637.6
8
42
1522.7
5
1537.0
4
44
11/1/201
0
10/1/201
0
45
9/1/2010
1545.2
7
1549.8
5
1476.1
4
46
8/2/2010
1268.9
47
7/1/2010
48
6/1/2010
1279.8
1280.7
1
49
5/3/2010
50
4/1/2010
51
3/1/2010
43
1258.9
1370.3
1
1313.2
9
5.18
%
3.21
%
3.65
%
0.98
%
0.93
%
1.82
%
7.41
%
2.71
%
3.07
%
5.98
%
0.30
%
4.99
%
16.33
%
0.85
%
0.07
%
1.73
%
8.13
%
4.34
%
3.80
%
4.93
%
7.23
%
2.19
%
0.74
%
1.32
%
2.73
%
1.42
%
9/1/2011
5128.5
8/1/2011
5394.5
7/1/2011
5815.2
6/1/2011
5945.7
5/2/2011
5990
4/1/2011
6069.9
3/1/2011
5908.8
2/1/2011
5994
2.24%
1/3/2011
12/1/201
0
5862.9
-0.63%
5899.9
6.72%
5528.3
-2.59%
5675.2
2.28%
9/1/2010
5548.6
6.19%
8/2/2010
5225.2
-0.62%
7/1/2010
5258
6.94%
6/1/2010
4916.9
-5.23%
5/3/2010
5188.4
-6.57%
4/1/2010
5553.3
-2.22%
3/1/2010
5679.6
6.07%
11/1/201
0
10/1/201
0
1265.1
8
52
2/1/2010
53
56
1/4/2010
12/1/200
9
11/2/200
9
10/1/200
9
57
9/1/2009
1134.2
1075.3
9
58
8/3/2009
925.93
59
7/1/2009
765.42
60
6/1/2009
722.08
61
62
5/1/2009
4/1/2009
763.65
808.22
54
55
1255.3
8
1257.1
6
1143.1
1
0.78
%
0.14
%
9.98
%
0.79
%
5.47
%
16.14
%
20.97
%
6.00
%
5.44
%
5.51
%
2/1/2010
5354.5
3.20%
1/1/2010
12/1/200
9
11/2/200
9
10/1/200
9
5188.5
-4.15%
5412.9
4.28%
5190.7
2.90%
5044.6
-1.74%
9/1/2009
5133.9
4.58%
8/3/2009
4908.9
6.52%
7/1/2009
4608.4
8.45%
6/1/2009
4249.2
-3.82%
5/1/2009
4/3/2009
4417.9
4243.7
4.10%
Sources:
For Whitbread (yahoo finance, 2014)
For FTSE-100 (yahoo finance, 2014)
%
0.27
0.221
0.049
0.84
0.04116
0.221
Cost of Equity
0.26216
Whitbread
whitbread
InterContinantal
The
following
information has been gathered from the annual reports of both companies with the
Exception of Share price which has been taken from Yahoo Finance. As it is very
important to choose a suitable company within the same industry of Whitbread so
that the price earnings ratio of Whitbread can be analyzed. The company chosen to
be compared against is intercontinental (IHG, 2014). The price-to-earnings Ratio of
Whitbread increased by 54 percent from 2012 to 2013 and 89.8 percent to 25.24
Whitbread
InterContinantal
Interest coverage
InterContinantal
Whitbread
Whitbread maintains good capital structure which normally between 15-25% over
the period of five year while finance cost fluctuated for period of 2009-2013. The
company has enough ability to pay off the financial charges because it have higher
interest coverage ratio while IHG has slightly low ratio but not too much worrying
factor. IGH has higher debt ratio as compared to Whitbread which effect clearly
show from Profits of IGH that is higher than Whitbread.
References
Anderson, K., 2012. The Essential P/E: Understanding the Stockmarket Through the
Price Earnings Ratio. peterfield,Hampshire: Harriman House Limited.
bloomberg, 2014. United Kingdom Government Bonds. [Online]
Available at: http://www.bloomberg.com/markets/rates-bonds/government-bonds/uk/
[Accessed 7 May 2014].
IHG, 2014. Intercontinantal Hotels & resorts. [Online]
Available at: http://www.ihg.com/intercontinental/hotels/gb/en/reservation
[Accessed 8 May 2014].
yahoo finance, 2014. FTSE-100. [Online]
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