Applied Equity Analysis: Stock Valuation Techniques for Wall Street Professionals / Edition 1

Applied Equity Analysis: Stock Valuation Techniques for Wall Street Professionals / Edition 1

by James English
     
 

Today's Most Comprehensive Practitioner's Guide to Modern Equity Analysis

Professional equity analysts must contend with a number of strong forces, each pulling in separate but equally relentless directions. Applied Equity Analysis ties these disparate elements into a seamless whole, and presents a clear, complete equity analysis picture.

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Overview

Today's Most Comprehensive Practitioner's Guide to Modern Equity Analysis

Professional equity analysts must contend with a number of strong forces, each pulling in separate but equally relentless directions. Applied Equity Analysis ties these disparate elements into a seamless whole, and presents a clear, complete equity analysis picture.

Written from the working analyst's point of view, in a singularly candid style that is both thought provoking and illuminating, Applied Equity Analysis covers:

  • How to think, speak, and develop investment recommendations in the language of Wall Street
  • How competitive forces directly impact financial results and, in the process, drive stock valuation
  • How to use valuation methodologies designed to quantify the growth and earnings assumptions inherent in speculative stock prices

Applied Equity Analysis emphasizes techniques that work on a day-to-day basis, rather than traditional but often impractical academic approaches. By combining a solid discussion of finance and investment theory with techniques popular among today's buy- and sell-side analysts, it presents a picture of stock investment analysis that is analytically rigorous, aggressively uncompromising, and based on earnings the true driving force of Wall Street.

"The equity analyst's job is to present a position, supported by financial and non-financial evidence. Data unnecessary to the argument are, in a word, unnecessary. However, the analyst must understand all the data, relevant or not. The ultimate goal of the equity analyst is the exploitation of any difference between a stock's price and its value."
 From Chapter 1

Applied Equity Analysis is about understanding all the data. Written by former JP Morgan managing director James English an adjunct professor of finance at the Columbia University School of Business, honored by The Wall Street Journal for his stock analysis skills this innovative book treats valuation as a practical tool rather than a theoretical exercise. Its integrated approach shows you how to build straight-line connections between a firm's fundamental competitive situation and its stock performance, by combining an understanding of a firm's competitive strengths and weaknesses with accurate financial statement analysis to build a more complete model of a firm's future stock market performance

Combining a solid discussion of finance and investment theory with techniques frequently used by working buy- and sell-side analysts, Applied Equity Analysis discusses:

  • Specific valuation techniques for identifying stocks that are undervalued relative to their peers
  • Quantitative techniques to link a firm's projected future financial performance to its potential future valuation based upon the current trading patterns of comparable stocks
  • A hybrid valuation technique to mathematically calculate a stock's inherent growth expectations
  • A proven strategy for formulating and successfully presenting an investment recommendation
  • An entire chapter on the Stern Stewart EVATM system as an alternative and potentially useful way of decoding financial statement information
  • Relative and hybrid earnings-based valuation techniques that are more practical than cash-flow methods and frequently far superior

On today's Wall Street, equity analysts must focus on a firm's ability to produce returns that exceed capital costs, and then estimate the firm's future power to maintain and increase those returns. Let Applied Equity Analysis supply you with in-depth examples and explanations of Wall Street's most important equity analysis tools and give you a hands-on, real-world handbook for equity analysis in today's complex financial marketplace.

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Product Details

ISBN-13:
9780071360517
Publisher:
McGraw-Hill Professional Publishing
Publication date:
05/14/2001
Series:
McGraw-Hill Library of Investment and Finance Series
Pages:
422
Product dimensions:
6.30(w) x 9.30(h) x 1.10(d)

Table of Contents

Preface
Pt. 1Getting Started
Ch. 1A Day in the Life3
Ch. 2Fundamentals of Equity Valuation21
Ch. 3Strategy and Competition I: The Firm's External Environment55
Ch. 4Strategy and Competition II: The Firm's Internal Competitive Resources83
Ch. 5Fundamentals of Stock Behavior101
Pt. 2The Basic Tools
Ch. 6Reading a Financial Statement: The Accuracy, Sustainability, and Predictability of Financial Information127
Appendix 6-1Gateway Financial Statements146
Ch. 7Reading a Financial Statement: the Composition of Returns149
Appendix 7-1Comparative Financial Analysis: Personal Computer Industry169
Ch. 8Reading a Financial Statement: Early-Stage Companies and Investment Capacity171
Ch. 9Reading a Financial Statement: Later-Stage Companies and the Transition to Maturity185
Ch. 10Economic Value Added: An Alternative to Traditional Analysis Techniques199
Appendix 10-1Gateway's Cost of Capital227
Pt. 3Financial Models
Ch. 11Financial Modeling: Base Case Assumptions and Model Design231
Appendix 11-1Dell Computer Corporation Consolidated Statement of Income251
Ch. 12Financial Modeling: The Income Statement and Balance Sheet259
Ch. 13Financial Modeling: The Statement of Cash Flows273
Pt. 4Equity Valuation
Ch. 14Valuation: Foundations and Fundamentals289
Ch. 15Combat Finance: Relative Methods and Companion Variable Models305
Ch. 16Hybrid Valuation Techniques333
Ch. 17The Quirky Price/Earnings Ratio349
Ch. 18Valuation of Speculative Stocks361
Ch. 19Equity Analysis and Business Combinations375
Pt. 5Getting It Down on Paper
Ch. 20Financial Writing: Don't Bury the Lead393
Bibliography409
Index415

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