The Effect of Company Fundamentals on Market Capitalisation -- A Quantitative Analysis of the Energy Sector in Brazil

This dissertation aims to explain market capitalisation in the energy market in Brazil using a dataset of 36 companies and the corresponding ratios: Asset Turnover, Debt Ratio, Current Ratio, Price Earnings Ratio, Net Profit Margin, and Book-to-Market Ratio. The method used is a regression model based on a principal component analysis to address several problems with the time series dataset, namely multicollinearity and to reduce the complexity of the model. There is also a robustness check and discussion of the model to evaluate the impact and validity of the results. This aims to help investors seeking value maximisation to use the model and its results, as well as company managers, to make the right decisions to optimise the fundamental company structure and maximise value. Key results are that net profit margin has a positive impact if increased on market capitalisation, which is aligned with the expectation that one of the most important objectives of a company is to generate cash. In general, the model is able to explain market capitalisation accurately so, the dissertation is a valuable tool for investors and company managers.