Equity research report the company
Group Project
Each member of the class is encouraged to become part of a study group consisting of two to
four students. This group will work together and prepare the topic explained more below.
Once a group is formed it cannot be changed, so please choose your groups CAREFULLY.
Topic: You must write an Equity Research Report.
Although there is no universal format for any equity research report, some rules and contents
are widely used and covered. Please refer to this document produced by the CFA Institute,
here. Also, there are various Equity Research Reports available on the internet. Search for them
and become familiar with the most common contents.
Select a company that you like. The only restriction is that you must select a company whose
stock is traded in the stock market. Then: Go to yahoo finance, use the selected company’s
ticker (examples: the ticker for Apple is AAPL, the ticker for Coca-Cola is KO, the ticker for
Tesla is TSLA) in the search engine and access to the company’s profile. There, you find 11
pages you can browse, from ‘Summary’ to ‘Sustainability’. The data/information conveyed in
these pages is the primary source of information for your project. Use it.
These are the aspects that you must include in your report:
1. Executive summary at the beginning of your report. An executive summary is a
brief description of what the reader is about to read once he or she goes through your
report. Again, there are many places where you can find information about how to write
a good executive summary. Search for it in the CFA document (link provided above).
2. The company’s financial ratios. You should select the most relevant ones, and you
should consider the ones that you have learned in the prerequisite course of Principles
of Finance. Make sure that you present the financial ratios for the last 5 years (2022,
2021, 2020, 2019 and 2018)
3. the annual rate of return (both arithmetic and continuous) for the last five years, the
standard deviation and variance for those five years’ monthly returns and the
company’s beta. Use monthly data, which means that you need to consider 61 prices
(12*5= 60, plus one because you need a base price to compute the first rate of return).
To estimate the beta, you need to determine the covariance between the stock returns
and the market returns. Use the SP500 index prices as a proxy to measure the American
stock market. If the stock that you selected is traded in a different country, make sure
that you select that country’s market index returns.
4. You need to apply the following models/techniques in your work:
a) Capital Asset Pricing Model (you need the company’s beta for such)
b) Dividend Discount Model (Gordon-Shapiro Model)
c) Multiples Valuation
.
Don’t forget to:
Go to the internet and search for more sources of information. Your equity report is a report
about the company’s fundamentals. All traded companies have annual reports, and they are
available on the internet. Search for information in them.
Other relevant sites you may find of interest are: Corporate Finance Institute, MarketWatch ,
Investopedia and Seeking Alpha.
Finally, surprise me! You must tell a story to the investor (let’s pretend it’s me) about the
company that you have selected. Make sure that you include some ‘strategic’ information: the
company’s main competitors, the opportunities and threats the company faces and some
insight on the company’s strengths and weaknesses, as you perceive them. You can tell a
story in some many ways, so be creative!
Instructions:
– Use your own words
– Include a cover page for your project including group names and students’ ID
– Alasala Colleges has a 0% tolerance policy on plagiarism. The maximum similarity
percentage (Turn-it-in) allowed is 30%. Groups with turn-it-in similarity percentage above
30% (up to 60%) will automatically lose 50% of the total mark. The other 50% will be
allocated based of the delivered project quality. Groups with turn-it-in similarity percentage
above 60% will be given ZERO.
– Your project should not be more than 20 pages long (minimum of 10 pages)
– Use at least 8 references
– The font should be Times New Roman, size 12, space 1.5
– Citation Harvard style
Project due until 11h59 PM of October, the 24th
Good luck!
João A. Ribei
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