Applied Equity Analysis

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 daytoday 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 sellside analysts, it presents a picture of stock investment analysis that is analytically rigorous, aggressively uncompromising, and based on earnings­­the true driving force of Wall Street. "The equity analyst's job is to present a position, supported by financial and nonfinancial 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 allthe data. Written by former JP Morgan managing director James English­­an adjunct professor of finance at the Columbia University School of Business, honored by The Wall Street Journal for his stock analysis skills­­this innovative book treats valuation as a practical tool rather than a theoretical exercise. Its integrated approach shows you how to build straightline 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 analysis­­to 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 sellside 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 valuation­­based 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^TM system as an alternative­­and potentially useful­­way of decoding financial statement information
• Relative and hybrid earningsbased valuation techniques that are more practical than cashflow methods­­and 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 indepth examples and explanations of Wall Street's most important equity analysis tools­­and give you a handson, realworld handbook for equity analysis in today's complex financial marketplace.