What goes into a two-page equity note
Question
If you had to write a two-page report on a company, what information and which ratios would you include?
Short answer
Business, numbers, valuation and a view. Cover a business and industry overview, recent results and outlook, and key ratios: growth, margins, returns (ROE, ROIC), leverage and liquidity (debt/EBITDA, interest cover, current ratio) and valuation multiples (P/E, EV/EBITDA, dividend yield) against peers. Finish with a recommendation, a target price and the main risks.
Adapted from Crack, Heard on the Street, Q5.4.8, p.53; question and answer rewritten by SelfMadeQuant.com.
See the hint and the full worked solution in the question bank (free account).
Open the worked solution