How to analyze a company

• Basic Information• Business Overview• Fundamental Analysis• Comparative Analysis• Recent Developments• Formulate an Investment Thesis

Basic Information

First things to Identify• Market Capitalization• Industry• Recent Stock Price

• 52 Week High/Low• YTD Performance

• Dividends, Dividend Yields• Earnings Estimates

All of this information can be easily found using basic online services, such as:

• Yahoo! Finance (finance.yahoo.com)• Wall Street Journal Online (www.wsj.com)• Moneycentral.msn.com• MarketLine – available through your Library account

• Or, you can use the tools in the Lab• Bloomberg• Reuters

Business Overview

• What to know:• Lines of Business

• What industry is the company in?• Who are its competitors?

• Business Segments• How is the company organized?

• Major Products / Services• What is the company’s competitive advantage?

• Major Customers• Company must list any customers that compose >10%

of revenues• Geographic presence

• % of Sales in each geographic region• Major Assets

Fundamental Analysis

• Objective is to evaluate the strength of the company• Analyze financial statement• Analyze financial metrics• Identify the trends in the business

Things to consider - Basics

• Revenues• Are sales growing? • At what rate? Faster or slower than its peers?• Compare current quarters with year ago quarterly

results

• Gross Profit• Amount of profit before considering administrative and

overhead costs• Are gross profit margins rising or falling? • Gross Profit as a % of sales should be rising as sales

increase

• Operating Profit• Evaluate as a % of sales• Are SG&A expenses rising or falling as a % of sales.

Recent Developments

What to know:• Results of quarterly reports

• Read 10Q’s, Company press releases• Find this in SEC filings, company websites,

Bloomberg, Yahoo!Finance, WSJ.com• Management’s Discussion and Analysis section

with 10Q’s, 10K’s• Compare results with analyst recommendations

• Company Press Releases• Company website, Yahoo!, Bloomberg, WSJ• Summarize important news at the company

• Change in Analyst Recommendations• Reuters, Bloomberg, WSJ, Yahoo!