“Company Analysis: Evaluating Investment Opportunities and Risks for [Company Name] in the [Industry] Industry”

Company analysis
Below are the things you can think about and include in your strategy report.
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You are welcome to add other factors that are not displayed here to your report.
COMPANY NAME
Industry: XXX
Recommendation: Buy/Hold/Sell
Current Price: $XXX
Target Price: $XXX
Company Overview
Step i: choosing a company
❖ What company do I have a unique knowledge on?
❖ What is a product that I can’t live without?
❖ Stock screening method
✓ Growth investor: EPS growth>20%
✓ Value investor:P/E<10X, and P/B<1X Step ii: company overview ❖ what does the company do? how does the company make money? what is the business model? ❖ key statistics Valuation related: ✓ market cap = price x # of shares ✓ P/E ratio P/B ration ROE.... ✓ dividend yield = dividend per share / price ✓ Free cash flow yield = FCF per share / price Company basic info related: ✓ sales by product, by geography ✓ market position ✓ shareholders Investment Thesis What is investment Thesis - Thebasicguidingprinciplesaninvestorestablishestojustify: ❖ Why he owns the company ❖ What he expects to happen ❖ What he sees that the market does not give the company credit for Key questions: ❖ Why this stock is a good investment? ❖ What do i see that the market doesn’t? ❖ why the company will last? ❖ what is making this company grow? ❖ .... Industry Analysis Key things to consider: ❖ Business cycle ❖ Industry performance by business cycle phase ❖ Industry growth rate Macro/Micro Trend Pretty much anything as long as it affects the broader market. For example: ❖ where the economy is headed ❖ interest rate ❖ political influences ❖ industrial chain ❖ .... Competitive Positioning Part i: what is the market share? Part ii: economic moat types: ❖ brand ❖ low cost ❖ distribution ❖ network effect ❖ high switching cost ❖ .... Part iii: porters 5 forces ❖ customers power ❖ suppliers power ❖ barriers to entry ❖ threats of substitutes ❖ competitive rivalry Revenue Drivers What are the main drivers behind the company’s revenue growth? For example: ❖ Emerging Markets ❖ Pricing Power ❖ New Products ❖ .... ❖ Any other factors that you can think of and that make sense Financial Analysis What are the financial statements and key forecasts for the company like? Think you may discuss: ❖ Profitability ❖ Growth ❖ Liquidity ❖ You may also attach the snapshot of certain financial statements or statistics in the report Valuation Valuation is about finding the intrinsic value of the company. Method i: relative valuation method ❖ rule of thumb: expected EPS x P/E ratio = target price ❖ also works with other ratios: P/B, EBITDA, free cash flow yield… ❖ pros: straightforward ❖ cons: shortsighted, can forecast at most 3 or 5 years Method ii: discounted cash flows (DCF) method ❖ discount rate: cost of capital; or rate of return ❖ pros: can forecast many more years into the future ❖ cons: complicated with a lot of assumptions Investment Risks What are the main investment risks for the company? Two main categories to consider: Risk sector: ❖ relevant: the risk is relevant to the company and the business ❖ thoughtful: consider industry peers ❖ manageable: worst cast scenario and how to rectify Catalyst sector: ❖ a specific thing ❖ a short-term event ❖ that could boost the stock to rise Rule of thumb: anticipate the risks and have an answer to them! Management & Governance Make a comment on the company’s management, and identify is the company is led by the right person, and if the management’s interest is aligned with shareholders. Conclusion & Appendices Conclusion ❖ current price ❖ target price ❖ implied upside in terms of percentage Appendices: ❖ it’s good to go over some of the appendices ❖ show where you got your number from, such as income statement, balance sheet and cash flow statement