Financial and valuation modeling is the process of valuing the company and its assets.
Accounts of a company are evaluated to determine the financial soundness (or otherwise) of the company. Profit and loss statements and managerial practices are overseen to prepare an accurate financial statement.
To be painstakingly detail-oriented is crucial. Strong math is also of utmost importance. Analytical skills have to be top-notch if a person is to be able to interpret the market and company performance. And communication skills are important because a research analyst communicates with clients and target industries and prepares reports regularly.
Desired information availability and consumption spurned a whole new industry, popularly known as Equity Research.
Equity research is the study of equities or stocks for the purpose of investments. Equity research is what an equity research analyst does. In simpler terms, equity research is the act of gathering information:
Investment analyst reports contain advice on whether to buy or sell the securities of specific companies or industries. They are produced by research analysts employed by firms that may have an interest in selling securities; however, they can provide a useful model to students in understanding how investment professionals analyze an industry and what data points they find of most interest.
No, I'm not emotionally attached to the things I do, so for me starting my own business limits my flexibility if I'm financially invested.
Describe the industries or companies you analyzed in the past. Also mention the companies or clients you worked for who are fairly predictable, but be specific.
Company analysis is a series of activities undertaken to analyse the operations of a business, focusing on the cause and effect of decisions and how they are likely to benefit (or not) future investors.
If your aim is to work in equity research or you're interested in any finance position, you should have a good reason for applying for the position you're interviewing for.
In the case of equity research, mention your non-finance work experience as a reason to focus on the sector you're interviewing for. Also, you could use a specific class or course that helped you prepare for this position.
One way to look at equity research vs. investment banking is that as an equity research analyst/associate:
On the other hand, as an investment banking associate/analyst:
Just do your research before you head to an interview and have couple reasons on why you picked this position over another one. Saying that you'll get to apply your finance skills might not be enough, because you could apply them whether you work in equity research or in investment banking.
Presentation or recommendation is based on the report, recommendations are made for the benefit of the company and its shareholders.
An analyst focuses on a specific company or industrial segment, researches it's economic performance, and documents it in the form of a report. The report is presented to the company management who then decides how to improve the services.
In Investment Banking, the analyst role is the lowest level in the organizational chart. The analyst usually reports to an associate, and therefore the associate in Investment Banking ranks higher than the analyst.
All the other processes of equity research culminate into the report writing stage where the equity analyst prepares an in-depth report accessible to relevant shareholders.
Economic analysis is a systematic practice undertaken to determine the usability of available resources, comparison between two or more resources, accounting opportunity costs and measuring the scope or viability of an investment.
In Equity Research, the associate is the lowest role in the organizational hierarchy and the associate reports to the analyst.
Review analyses you have been experienced with, such as product and scenario analysis or analysis of economic performance.
Motivate a little in the sense that it's one form of measurement for success. But otherwise not a whole lot. Partly why I would not consider banking at this point in my life as I personally do place a value on my free time and would forgo a potentially bigger payoff via the banking/PE route.
The purpose of equity research is to study companies, analyze financials and look at quantitative and qualitative aspects, helping investors of varying degrees to make an informed decision.
It also involves understanding current market trends, both from the perspectives of macro economy and micro economy, and report findings. Since the equity research targets a specific audience, it is necessary to tailor the findings to the audience demand. Further, adequate stress is laid on the accuracy of information. If investors take actions based on any kind of misinformation or misrepresentation, losses are tremendous and harmful to both the investor and the company. Therefore, equity analysts spend a considerable amount of time analyzing stocks and valuating estimates.
The Investment Banking function is usually organized by industry groups and product groups. Industry groups are essentially sectors, such as industrial, Consumer Products, Energy, Financials, and others. Product groups include functions like ECM, DCM and M&A and serve companies in all sectors. The analyst role is at the lowest level.
Research analysts are highly-motivated proactive professionals who are out to make a difference. They are fast-paced, adaptable, dynamic and demonstrate initiative. They are strong team players, have a passion for technology and think creatively.
Multiple steps are involved in the equity research process, which are given below:
Industry analysis is a tool used for assessing current markets and understanding its complexities. Political, economic and market factors are reviewed to understand its influence over the development of the industry.
Even if I win the lottery tomorrow, I would still live my life exactly the same. I'm pretty content at the moment so just keeping the course is enough to motivate me for now.