DP World Company Essay Example | Topics and Well Written Essays - 1000 words

DP existence Company - turn up ExampleDP World operates in Europe, Middle East, Africa, Asia Pacific, Indian sub-continent, Australia and in America. The friendship has taken orifice in the process of reducing frequency of lost time injuries and has been successful in bring low-spirited the value of the same to 7.6 in 2011 from 10.1 in 2009. The confederacy also focuses on the internal control of the company related to the organizational structure of the company, code of conduct, whistle blowing policy, risk management and performance, etc. Pensions and post loneliness benefits are provided to the employees of the company, which shows that the company takes enough care of its employees even after the termination of employment (DP World 2011 Annual Report 1-10). Reason for DP stock being overvalued The stock of a company is state to be overvalued if the current value of the stocks of the company is greater than stocks intrinsic value. Here the bell lettuce of the stock are p rimarily being considered in order to explain the conditions behind the overappraisal of the stocks of DP World. The price earnings ratio of the company has been relatively high in comparison to the diachronic price earnings ratio of the company, which is why the stock of DP World is considered to be overvalued. The growth in the spheric container traffic has risen by three times the rate at which the world utilise to trade in the past decade. This has also benefited the investors of the DP World due to the emerging trend of the global rescue. DP World has escaped the Wall Street crunch and the consecutive downturn of the global economy as witnessed in 2008 and have successfully returned to the range of 40% with $2.7 billion of cash along with the long-term debt of the company. Thus, the rise of DP World has been a consistent one. But the company has clearly shown signs of over rating with its initial public offering price which has turned out to be 22times the value of the s hares of the company. The main reason behind this is the fall in the share price of the company from $1.20 to $ 0.70 at the time of the global financial meltdown in 2008-09. The initial offering rate of the company was traded at a high range which led to the investors investing in the higher range to get a substantial return from the company. In a process of making lovesome profit, the stocks of the company became overvalued. Generally, global container companies trade 9 times the earnings of the company, so the DP Worlds valuation metrics increased by 12 times the earnings of the company. This resulted in the price earnings ratio of the company to rise at 25 times in 2011. An increase in the price earnings ratio of the company can also be another reason for the over valuation of the stock of DP World. Moreover, listing of the stocks of DP World in the LSE (London Stock Exchange) can be the reason behind the overvaluation of DP World stock. Even the stock split strategy of the com pany was a reason for the overvaluation of the stocks of DP World. The volatility of the market can result in the valuation of the stocks of the company to be either over valued or undervalued. The consistency of the DP World can be witnessed from the annual report of the company, which shows the company is progressing randomly whereas the financial global economy has not revived in addition causing the overvaluation of the stocks of DP World. However, the fall in the revenue of the company from $3,188,941,000 (in 2010) to $2,977,731,000 (in 2011) is slowly leading to the