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Description of Applied Equity Analysis

This is 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; and, 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 EVA[trademark] system as an alternative - and potentially useful - way of decoding financial statement information; and, 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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Title Information

ISBN:

9780071360517

Pages:

422 pages

Format:

Hardback

Product Code:

13825

Publisher:

McGraw-Hill

Published:

01/05/2001

Edition:

1st Edition

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About James English

James English is currently an adjunct assistant professor of finance at Columbia University School of Business. He spent twenty years with JP Morgan serving in many positions, including managing director of JP Morgan Capital, the firm's venture capital unit. In his over quarter-century career in finance, English practiced--and become proficient in--virtually every one of the field's subspecialties: commercial banking and credit analysis, corporate treasury and foreign exchange, capital markets, mergers & acquisitions, venture capital, and sell-side equity analysis.

Contents of Applied Equity Analysis

Part I: Getting Started
1. A Day in the Life
2. Fundamentals of Equity Valuation
3. Strategy and Competition I: The Firm's External Environment
4. Strategy and Competition II: The Firm's Internal Competitive Resources
5. Fundamentals of Stock Behavior

Part II: The Basic Tools
6. Reading a Financial Statement: The Accuracy, Sustainability, and Predictability of Financial Information
7. Reading a Financial Statement: The Composition of Returns
8. Reading a Financial Statement: Early-Stage Companies and Investment Capacity
9. Reading a Financial Statement: Later-Stage Companies and the Transition to Maturity
10. Economic Value Added. An Alternative to Traditional Analysis Techniques

Part III: Financial Models
11. Financial Modeling: Base Case Assumptions and Model Design
12. Financial Modeling: The Income Statement and Balance Sheet
13. Financial Modeling: The Statement of Cash Flows

Part IV: Equity Valuation
14. Valuation: Foundations and Fundamentals
15. Combat Finance: Relative Methods and Companion Variable Models
16. Hybrid Valuation Techniques
17. The Quirky Price/Earnings Ratio
18. Valuation of Speculative Stocks
19. Equity Analysis and Business Combinations

Part V: Getting It Down on Paper
20. Financial Writing: Don't Bury the Lead

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