October 31, 2011

CEO Lesson #2 – Capital IQ Plug-in Tutorial

The information in this document is for EDUCATIONAL and NON-COMMERCIAL use only and is not

intended to constitute specific legal, accounting, financial or tax advice for any individual. In no event

will QUIC, its members or directors, or Queen’s University be liable to you or anyone else for any loss

or damages whatsoever (including direct, indirect, special, incidental, consequential, exemplary or

punitive damages) resulting from the use of this document, or reliance on the information or content

found within this document. The information may not be reproduced or republished in any part

without the prior written consent of QUIC and Queen’s University.

QUIC is not in the business of advising or holding themselves out as being in the business of advising.

Many factors may affect the applicability of any statement or comment that appear in our documents

to an individual's particular circumstances.

© Queen’s University 2010

Legal Disclaimer

TOPIC Section

Overview of Plug-in 1

Company Historical Financial Data & Estimates 2

Industry Specific Data – Reserve Life Index 3

Market Data - Indices Prices & Short Interest 4

Trading Multiples – Forward P/E Multiples 5

Company Info – Institutional Ownership 6

Outline

Overview of Capital IQ

What is Capital IQ?

• Capital IQ is a real-time financial database that can be accessed through any internet connection

• It has become the industry standard for financial professionals, and an essential tool for portfolio management

• Key benefits include real-time market data and the ability to create dynamic excel based financial models

Who has access to Capital IQ?

• Each sector team on QUIC has access to an account

• Two accounts will be used by the executive for portfolio monitoring, educational purposes & market analysis

• One account will be installed in the NSC and will be available for all students to use, free of charge

What can be done with the Capital IQ plug-in?

• Primary functionality is as a tool for fundamental analysis– trading levels, financial ratios, trading multiples

• Analyst forecasts for earnings & commodity prices

• Short interest data analysis

4

Company Historical Financial Data & Estimates

5

Formula BuilderCategories Income Statement

Revenue, COGS, SG&A, R&D Expense, Operating Income, Net Income, Basic EPS, Dividends, etc.

Balance Sheet

Current Assets, Current Portion of LT Debt, Pension & OPEB, Shares Outstanding, Net Working Capital, Contingent Liabilities, etc.

Cash Flow Statement

D&A, Change in B/S Accounts, Capital Expenditures, Issuance/Repurchase of Common Stock, Debt Repaid, etc.

Financial Ratios

ROA, ROE, EBITDA Margin, Asset Turnover, Debt-to-EBITDA, Capex-to-Revenues, etc.

Growth Ratios

EBITDA Growth, Net Income Growth, Tangible Book Growth, etc.

Estimates

EPS, Revenue, EPS Growth Rates, Target Price, # of Analysts, etc.

Company Historical Financial Data & Estimates

6

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 CY2011 CY2012 CY2013

DJIA FY EPS Percentage Change (2000 – 2013E)

Learning Points Pull constituents of an index

Entering Identifier – Ticker or Cell

Period Type

Date in Cell

Audit Data

“Sanity Check” and filtering data

Industry Specific Data

7

Formula BuilderCategories Found in the Financials tab

Data may be slightly less available, be sure to audit the information that you find

Will be more useful for some sector teams than others

Energy & Utilities

Acquisition Costs, Exploration Costs, Production, Closing Reserves, Avg Price / Mcf, # of Wells, etc.

Metals & Mining

Grades, Measured & Indicated Resources, Cash Costs, Averaged Realized Price, Remaining Mine Life

Consumers

Stores opened, Same Store Sales Growth, Total Retail Sq Ft., Franchises

TMT

Gross Additions, ARPU, Churn, Capital Investment

FIG (Banks, Insurance & Financial Services Template)

Allowance for Credit Losses, Tier 1 Capital Ratio, Nonperforming Loans, Premiums Written

Cash Yield

FFO, AFFO, NAV, Sale of Properties, Occupancy Rate

Industry Specific Data

8

Reserve Life Index in Years of Energy Supermajors (1999 – 2010)

Learning Points Most likely to work well for larger companies – better information availability

Explore your sector and experiment with what options are available

Very easy to try with a number of companies once template is built simply by changing ticker

Supplement the data that pulls with primary research using SEDAR filings and analyst reports

Understand the applicable metrics, critically think about what information you can draw from the trends that you see

0

2

4

6

8

10

12

14

16

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

NYSE:XOM NYSE:CVX NYSE:BP NYSE:RDS.A NYSE:TOT

Market Data – Indices Prices & Short Interest

9

Formula BuilderCategories All PMs should work to integrate Capital IQ with their

Outperformance spreadsheets – huge time saver

Market data is less robust than Bloomberg

Equity Market Data

Day Close Price, VWAP, 52 Week High & Low, Beta, Short Interest, Dividend Yield, Float Percentage

Rates & Indices

Equity Indices Day Closing Price

Commodities & Futures

Not currently enabled

Market Data – Indices Prices & Short Interest

10

Learning Points Search function for Cap IQ identifiers

Extending the formulas to customize for dates

Transpose function in Excel

Frequency of data – adjust accordingly

Role of an analyst is not only to crunch the numbers, but also understand the drivers of the business and think critically about the trends and anomalies observed

-40%

-30%

-20%

-10%

0%

10%

Feb-2011 Apr-2011 Jun-2011 Aug-2011

S&P/TSX Capped Energy S&P/TSX Capped Utilities

Weighted Index

Alcoa Share Price (LHS) & Short Interest (RHS)Energy & Utility Indices Performance

0%

2%

4%

6%

8%

10%

$0

$10

$20

$30

$40

$50

Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11

Alcoa Share Price Short Interest (% of Shares Outstanding)

Trading Multiples

11

Formula BuilderCategories Should be used as a supplement, not a replacement to

the existing coverage universes maintained by each sector

Well suited for historical multiple analysis

Trailing trading multiples works well, forward multiples capability may not be provided

Trailing Trading Multiples

EV / Revenue, EV / EBITDA, EV / EBIT, EV / UFCF

P / Sales, P / EPS, P / BV, P / TBV, P / LFCF

Bank of Nova Scotia P / E LTM

11.4x

13.6x

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

18.0x

2005 2006 2007 2008 2009 2010 2011

Company Information

12

Formula BuilderCategories Some categories will be quite useful, others rarely used

Set up a QUIC template to populate information for companies in universe

General

Very little useful

News

Top stories, URL, date

Professionals

Names, Background, etc.

Public Ownership

Holder name, % of Shares Outstanding, Institutional % of Shares Outstanding, Investment Style, Insider Buying/Selling

Private Ownership

Current and Past Direct Investors, Relationship, Stake, Transaction Dates, etc.

Latest Analyst Coverage

Analyst Name, Number of Analysts Covering Company, Email Address (to determine broker)

Energy Supermajors Top 5 Institutional Holders

0%

5%

10%

15%

20%

25%

NYSE:BP NYSE:XOM NYSE:TOT NYSE:CVX NYSE:RDS.A