《3_Stock_Valuation_Fundamental_Analysis》.ppt

December 28, 2006 Stock Valuation – Fundamental Analysis Essentials of Corporate Finance Chapters 2, 3, 5, 7 Topics What is Fundamental Analysis? Who Performs Fundamental Analysis Fundamental Analysis Process Data Gathering Building Models Analysis Determining the Business Outlook and Value Buy / Sell Recommendations Career Advice for a Equity Research Analyst Fundamental Analysis Fundamental Analysis seeks to determine a company’s outlook based on factors related to the company itself Fundamental analysis includes: Company Analysis Evaluation of the business model Financial Statement Analysis Ratio Analysis Cash Flow Analysis Management Analysis Economic Analysis Economic Forecasts and Trends Industry Analysis Who Performs Fundamental Analysis? Equity Research Analysts Produce fundamental analysis to generate investment recommendations Investors Portfolio Managers make decisions based on the recommendations of research analysts Fundamental Analysis Process Prior to making an investment recommendation, an Equity Analyst conducts fundamental research on a particular company This process includes Gathering Data Building Models and Analyzing Data Determining the Business Outlook and Value Developing a Recommendation Data Gathering The first step in fundamental analysis is data gathering. Data sources include: Company specific publications SEC Filings (e.g. 10K (Annual Report), 8K, Proxy Statements, etc) Company press releases Company website Media Industry specific publications (e.g. Banking – American Banker) General Media Wall Street Journal Morningstar Barron’s Data Gathering Additional Data Sources include: Quarterly Analyst Calls Company Presentations Personal Meetings / Conference Calls Company officers, competitors, industry experts, suppliers, customers, etc. Financial Databases FactSet Bloomberg Reuters Building Models Equity Research Analysts build economic, industry, and company models that will project a company’s stock price. These models include: Mode