When business students from seven regional universities competed against one another this week by dissecting the finances of PPG Industries, their views of the Pittsburgh coatings producer were not much different from those of the Wall Street analysts they were trying to emulate.
They concluded PPG shares are either a screaming buy or a hold, depending on which group was making the case.
But if you believe the Penn State University team that won the competition Monday, PPG shares will be priced at $200.50 a year from now. That would be about 7.5 percent above the $186.59 close Tuesday.
"We knew the company well and we were very prepared for what the industry is dealing with," said Alec Lucente, one of three Penn State team members.
One of the schools they beat was the University of Pittsburgh, which had won the regional competition the four previous times it has been held. The Pitt team forecast the rosiest outlook for PPG, setting a one-year price target of $236.
The annual Research Challenge is organized by the CFA Institute, a Charlottesville, Va.-based professional group for certified financial analysts. It is designed to give students real-life experience analyzing a publicly traded company the way a Wall Street analyst would.
Penn State team members said they were comfortable looking at PPG because they own the company's stock in the school's Nittany Lion Fund, which manages about $6.3 million in private investors' money.
Teams of three to five students from each school analyzed PPG with the help of a faculty adviser, who could provide up to 10 hours of advice, and an industry mentor, who could consult with the team for six hours. The students documented their analysis in a 10-page paper, then made a 10-minute presentation Monday to a panel of CFAs who grilled them on their findings.
"That's where you get to dig in and see who knows the company the best," said Ryan Bend, Federated Investors vice president and portfolio manager, one of three judges. "The winning team handled the questions the best."
Penn State team member Emily Zheng said she felt good about their written report after the judges commented that the appendix attached to it "was so long they thought we had a team of lawyers."
The other schools competing were Carnegie Mellon University, Duquesne University, Washington & Jefferson College, Indiana University of Pennsylvania and Penn State Behrend.
In addition to sharpening their financial analysis skills, the contest also polishes the teams' speaking skills by forcing them to cram their most important findings into the 10-minute presentation. Each team member must speak during the presentation.
The time limit is strictly enforced, as the CMU team discovered. Team members were discussing the risks of investing in PPG when time expired.
"Just finishing up, we recommend a buy," Kunho Baik sheepishly -- and quickly -- told the three judges.
Last year, 3,500 students from 775 universities in 54 countries participated in the three-stage competition. The Penn State team now advances to the Americas finals, set for March 18 and 19 in Denver.
Should it win there, it will head to Bangkok for the global finals April 25.
Len Boselovic: firstname.lastname@example.org or 412-263-1941.