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Running Head: BGOUY ANALYSIS !1 Bang & Olufsen Group was founded in the year 1925 in Struer Denmark by Peter Band

 

and Svend Olufsen. They are developing high quality, innovative audio, and visual solutions and

 

recognized for their innovation and quality of the product. They have two primary business

 

segments Bang & Olufsen and B&O PLAY. It was one of the chosen ADR for investment in the

 

portfolio.

 

Name of the Percentage change firm in stock price Bang & 3.51% Primary reason Announcement of share buy-back. Olufsen

 

Source: (Bang & Olufsen, 2016)

 

The performance of BGOUY was not significantly fluctuating during September 2016

 

(Refer Appendix A). The announcement of buy back of shares will have impact on the stock

 

price of the company. It will create a shock to the investors, it tends to have some jerks and

 

shocks in the market. But at the same time it can have positive influence as a company will buy

 

back shares if they have sufficient profits.

 

BGOUY is listed in NASDAQ OMX market, and it was generating a lower return over

 

the period based on the daily index movement. But the price movement of BGOUY was positive

 

at 0.338% over the period (Nasdaq, n.d.) (Refer Appendix B). The S&P 500 market return during

 

the same period was lower at 0.043% when compared to the BGOUY. It indicates that the

 

performance of the stock was better that both the stock markets. BGOUY has outperformed their

 

domestic market, and they have outperformed the international market. Poor market return

 

indicates the poor market performance, but it did not influence the performance of BGOUY. BGOUY ANALYSIS !2 Correlation between BGOUY and NASDAQ OMX is 0.25393 (Refer Appendix B). It

 

indicates that it is positively correlated with the market but they are less positively correlated

 

with the market. It is evident by from the return that BGOUY generated when compared to the

 

NASDAQ OMX. Correlation between BGOUY and S&P 500 index is 0.34769 indicating that

 

BGOUY is positively correlated but has less correlation with the S&P500 market.

 

From the thorough analysis of the annual report of BGOUY, it is clear that they rely

 

heavily on the international market for their revenue generation, and significantly higher part of

 

the revenue is generated from outside country. ?The exchange rate has more influence on the

 

entire business (Bang & Olufsen, 2016, p. 12)?. They are spending hugely on research and

 

development to develop best innovative products that will enable them to remain competitive

 

and to gain more market share. Regional segmentation of the business is Europe (includes

 

Denmark), North America, BRIC and Rest of world.

 

The movement of US dollar against the DKK is fluctuating there was significant change

 

during September 7, 2016 when compared to September 22, 2016 (Onda, 2016) (Refer Appendix

 

B). The graph shown indicates the change in DKK value for one USD. The decrease in the graph

 

indicates the strengthening of DKK against USD and increase in the graph indicates about the

 

strengthening of USD against DKK. A remarkable fact between the movement in the stock and

 

the exchange rate during the period provides a better understanding of the influence of exchange

 

rate over the stock price.

 

The stock price has control over the exchange rate movement. Whenever DKK is

 

strengthening against USD, then there was a decrease in the stock price of the company.

 

Similarly, whenever USD strengthened against DKK, there was an increase in the stock price of BGOUY ANALYSIS !3 the company. It clearly indicates that exchange rate has an influence on the stock price of the

 

company. Most of the sales are generated from outside the country and thus, increase or decrease

 

in the exchange rate will have both positive and negative performance of the stock.

 

When a business is generating revenue from various countries that has different exchange

 

rates, then it will have an impact on their financial statement. If the domestic currency weakens,

 

then the amount of revenue and receivables will increase and then it decreases if the domestic

 

currency strengthens and vice versa in case of payables. It will have impact on the stock price. BGOUY ANALYSIS !4 Appendix A ! Appendix B

 

Correlation between BGOUY and OMX 0.25393 Correlation between BGOUY and S&P500 0.34769 BGOUY ANALYSIS !5 Appendix C !

 

Source: Onda, 2016. BGOUY ANALYSIS !6 References

 

Bang & Olufsen. (2016). Annual General Meeting in Bang & Olufsen a/s. Retrieved from

 

http://az498215.vo.msecnd.net/static/files/general-meeting/General%20meeting/

 

BO_1609_AGM_UK.pdf

 

Bang & Olufsen. (2016). Annual Report. Retrieved from

 

http://az498215.vo.msecnd.net/static/files/annual_reports/BO_AR15-16_UK.PDF

 

Nasdaq. (n.d.). Bang & Olufsen Unsp/Adr (BGOUY) Historical Prices & Data - NASDAQ.com.

 

Retrieved from

 

http://www.nasdaq.com/symbol/bgouy/historical

 

Onda. (2016). Historical Currency Converter - OANDA Solutions for Business. Retrieved from

 

https://www.oanda.com/solutions-for-business/historical-rates/main.html

 







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