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Blount international company is a multinational company which manufactures in the U.S. Canada, Brazil, and Brazil which deals with forestry equipment and building and construction equipment. 70-80% of the Blount international company business is in chain saw chains and the company is highly leveraged. The company believes in quality to achieve excellence. The company intends to revaluate its stock as an investment. This would be acquired through reviewing the progress of the company to understand its operational basis in terms of strengths and weaknesses compared to other companies in the same industry or competitors. The global economy highly affects stocks; therefore, its analysis ought to be performed to understand the global economic conditions. With that information, the future prices of the company's share can be forecasted.
Review of the company.
Â Â Â Â Â Â Â Â Blount international incorporation is a world leading manufacturer of equipment used in the global forestry industry. These equipments may include chain saws, sprockets and bars, and their spare parts. The company operates in the international business environment making its sales to more than one hundred countries around the world. The company specializes in garden and forestry equipment which is highly demanded throughout the world. The company's products are durable and of high quality thus making the company retains most of its high value customers. The company also produces spare parts and accessories for their machines. It also ensures that their customers have access to quality spare parts thus maintaining the efficiency of the machines (Gentile 176).
Â Â Â Â Â Â Â Â As the leading company in innovations and quality, Blount international incorporation has widely diversified its lines of productions and business. Above the production of quality forestry equipment, the company is also involved in the construction industry. Building and construction has been the order of the day in the current world, thus venturing in the industry can be regarded as a well thought diversification idea. The company manufactures concert chain saws and diamond chains which are used in concrete cutting in the building and construction industry. Â In fact, this venture has greatly influenced the transformation of the company to a global manufacturer of the construction equipments with 70%-80% of their business in chains saw chains. It can be argued that, venturing in the production of concrete cutting equipments is more of a continuation of their initial line of production. In most countries where the company has ventured, house constructions are done using concrete stones and the roofing is done using forestry products like timber. Therefore, it is a fact that, the forestry equipment customers also had a great need of concrete cutting equipments. This is a brilliant idea which depicts the brains in the management of Blount incorporation (Gentile 176).
Â Â Â Â Â Â Â Â In the analysis of the strength of Blount incorporation, the most important factor to consider is that, the company has managed to win the confidence of millions of customers in many countries of the world. As indicated above, the company operates in more than one hundred countries in the world. This fact can lead to the assumption that the company is almost, if not fully monopolized in the industries. The numerous customers of the company automatically depict how profitable the company is. Economically, the sales of a company greatly impacts on the profit margins of the organization (Gentile 176).
Moreover, the ability of the company to retain its customers is also strength of the company. The company has been able to retain its customers because of its quality products. The forestry and the construction equipment from Blount international have magnified the company to the leading manufacturer of such goods in the world. Then diversification of the company can also be considered as a factor among the strengths of the company. The company has been able to broaden its scope of production thus gaining customers in both the forestry industry and the building and construction industry. This fact has made the company to be very strong thus projecting a constant improvement of its shares in the stock markets.
The company faces great competition from China manufacturers who make chains and other of the company's similar products. The competitive advantage of Blount international incorporation is the fact that, the company has been able to venture in two very prominent industries in the world. The competitors of the company in either of the industries have not ventured in the two industries yet they are very much related. It is a fact that, the two industries share the same customers. Therefore, retaining customers has been simplified. Generally, customers tend to develop a liking to an agent who offers the variety of products they need. Moreover, the company makes the spare parts for the products they produce. The competitors of the company assemble whole machines but do not make separate spare parts for their products. This can translate that, whenever a single part of the machine breaks down, then the whole machine goes to waste. This challenge being solved by the Blount international making it highly advantaged over its competitors (Bongle 123).
Blount incorporation is an international organization with its main headquarters in Portland, USA. In addition, the company has several headquarters in the many countries it operates. In the main office, the overall boss is the president of the company, who works closely with a body of directors made up of seven individuals. In the branch level, the company is headed by the managing directors who are different in all the branches. The managing director manages the operation of the company in the specific countries and is answerable to the main office in United States of America. In the branch level, the company has different management departments which work in unity to achieve the objectives of the company in that country and the world in general (Gentile 176).
The superb management of the company can greatly be attributed to the growth of the company. All the offices are occupied by professionals in the concerned field, thus ensuring the effectiveness of the manufactured products. In addition, the company has set very attractive remuneration packages for its employees. This fact motivates them, greatly and also assist in the retention of the personnel. It is economically agreed that, the experience of a person in any field determines his or her efficiency. Therefore, retaining the company's employees in their position for long has improved the quality of their output, thus facilitating the growth of the company. The acquired customer confidence is also a factor that has led to the massive growth of this company. In fact, this has been the factor considered on identifying the countries to establish the branches (Gentile 176).
The company has several assets which may affect its valuation. The company has quality manufacturing plants in all its branches. These plants are fully equipped with modern machines which are of great value. Each manufacturing plant has several staff buses, pickups and trucks which are used for the transportation of the materials to the manufacturing plants and also offering after sales services to the customers. All these vehicles and machines are parts of the great assets owned by the company (Kastenelson 234). Â
According to the financial forecast center, the United States of America general economy is expected to improve significantly at the rate of 15%to 20% over the next three years. In addition inflation pressures in the United States of America and the world in general have been subdued though some important risks remain in the sharply diminished room for policy maneuvers. Global economic policies need to sustain and strengthen economic recovery in the world. According to the information offered by the international monetary fund, the recent increases in oil prices may make the recovering world economic growth to have a sharp slow down in the next one year. However, the situation is expected to change positively after the year due to the comprehensive strategies enforced to facilitate a speedy healing process. It is unfortunate that, the next one year may bring the global economy a little bit down. This is expected to happen due to the fact that, the recovering process is still at its initial stages (Bongle 123).
Stock Market Forecast
Â Â Â Â Â Â Â Â With regard to the global economic forecast, the stock markets are expected to behave in the same manner. This can be supported by the fact that, the united states of American economy is not operating in a vacuum and thus ought to conform to the dictations of the global economy. The market share indexes in the stock market are expected to move down in the next one year and then pick over the following three years. The first year is greatly affected by the global economic shock caused by the constantly increasing oil prices. However, the next two years will experience the effects of developed economic recovering strategies, giving expectations of improved market share indexes. The S&P 500 index is expected to move down to 1300 in the year 2012, and then increase constantly to 1400 and 1500 in the year 2013 and 2014 respectively. The US currency is expected to reduce in the year 2012 and then improve constantly in the following years. The expected increase in the value of the currency will happen due to the constant economic growth expected in the United States of America as from 2013. Therefore, investors are advised to increase the purchase of securities in the years 2011 and 2012 with an expectation of their value increment which will be an effect of the stabilized economy in 2013 onwards (Kastenelson 234).
Â Â Â Â Â Â Â Â Blount incorporation operates in two major industries. These include the forestry industry and the building and construction industry. In both industries, the company has been very competitive compared to other companies offering the same products. The average production rate of the company in the last two years is more than double the rate of production of any other competing company. According to this data, the company is expected to have a constant production rate during in the year 2012, and then the production rate is expected to start increasing significantly over the years after. The data shows how strong the company is compared to other companies in both industries. Therefore, the profit margins of the company are expected to increase significantly in the following years (Gentile 176).
Â Â Â Â Â Â Â Â The company's strength is also depicted by the rate at which the company is expanding. As indicated above, the blunt international started as a single branch in New York in the year 1990. Twenty years after, the company has established branches in about one hundred countries in the world. Compared top the competing companies, only one company in the forestry industry has a branch beyond the US jurisdiction. This shows how strong the company is. Logically, such a company is expected to develop in the same rate if all other factors were kept constant (Bongle 123).
Â Â Â Â Â Â Â Â This ratio will compare the rate at which debt was used to establish the company's capital structure.
Blount international company
competitor company A
competitor company B
According to the above tabled information, the ratio at which the debt level of Blount Company compared with other competitors is 2:4:6. This shows that the Blount Company started strongly and has used minimal debts to acquire their capital.
Blount international company
competitor company A
competitor company B
Liquidity ratio gives a picture of the short term solvency or financial situation. An ideal company ought to have a considerable liquidity ratio compared to its competitors. According to the table above, Blount company has a liquidity rate of 8:3:7 compared with its two competitors. This shows that, Blount Company is in a better position to finance its projects compared with its competitors (Kastenelson 234).
Blount international company
competitor company A
competitor company B
Profitability ratios make use of the profit margin analysis of different companies. It shows the returns achieved by the company on sales and on the capital employed. According to the above table, the company gains more profit than its major competitors at the rate of 5:3:2. The high profit margins achieved by the company have facilitated the enormous growth of Blount international (Bongle 123).
Company Financial Forecast and Valuation
OPERATING MARGIN (Dollars)
NET MARGIN (Dollars)
PROFIT GROWTH (%)
Â Â Â Â Â Â Â Â The above table is an analysis of the companies operations in the last three years and future predictions on the price of the companies share ion the stock market. The table shows than the company had a trend of revenue increase for the last three years. However, currently the revenue has decreased because of the current economic conditions. However, the situation is expected to improve tremendously as from the year 2013. The change of situations in the performance of the business will automatically affect the price per share in the stock market as shown in the table above. The years 2011 and 2012 indicates a reduction in the price per share index. This is due to the performance of the business in those times. However, according to the predictions of the economic wave, many people will be buying more shares in those years due to the great profit margins expected in the year 2013 and 2014 (Kastenelson 234).
Â Â Â Â Â Â Â Â Blount international company greatly meets the expectations of its customers not only in the United States of America but also in other parts of the world. Customers are getting the real value for their money due to the fact that, the company manufactures goods of the highest quality in the world. The company also adds value in the society because it is giving an opportunity for investment. As shown in the table above, the prices of the company's shares have continuously been improving meaning that, investors made great profits from the shares (Gentile 176).
Â Â Â Â Â Â Â Â The company is also offering employment opportunities for a great number of people in the world. In fact, in US alone, the company has employed more than five hundred staff members. In addition, more and more people are employed in the countries where the company has branches. Moreover, the company offers attractive pay packages to its employees. This means that, the employees enjoy quality life and can afford other necessary services like health care and education (Kastenelson 234).
Â Â Â Â Â Â Â Â As identified above, Blount Company is not only a profit making organization but also facilitates enhancement of social responsibilities geared to the economic development of the world. This is a challenge to other companies in the world. They ought to emulate the same and the social welfare pf their customers and the employees. I would also recommend for the interested investors in the stock exchange to accumulate more shares at this period so as to maximize profits in the near future (Bongle 123).