Anatomy of a Perfect Stock Report

For an equity investor, one of the most important sources of information while making investment decisions is a stock report, also known by many other names such as equity research report.

You would generally expect the research reports to provide you objective analysis and deliver critical information about the stock that you can use to make your investment decision. The report should provide you a comprehensive, in-depth overview of the company's performance, recent developments, and future outlook.

Let's look at the key information a good stock report should cover.

  • Report Date: This is important as stock reports are updated frequently, usually weekly. You need to know how recent is the report that you're looking at.
  • Summary: The report should give you a brief but informative summary of the business.
  • Analyst Opinion: The report should provide you an overall Buy, Sell, or Hold recommendation on the stock being analyzed.
  • Outlook: Base on the stock evaluation system used by the analyst, provide an outlook on whether the stock will outperform or under perform all other stocks on average.
  • Fair Value: Provide the fair value of the stock based on analyst's valuation
  • Risk: Provide a rating for the stock volatility base don past one year's stock price movement.
  • Earnings/Dividends Standing: Provide an assessment of the stability of earnings and dividends of the company over the past 10 years.
  • Technical Analysis: Based on technical indicators, provide an indication of whether the stock has a bullish, bearish or neutral outlook.
  • Relative Strength Ranking: Provide relative strength ranking of the stock (usually on a scale of 1 to 99). This helps in understanding how the stock has performed compared to all other stocks.
  • Insider Activity: This highlights any insider activity, for example, whether company directors and key employees have been buying or selling their own stocks.
  • Price Charts: Charts showing key trends such as price ranges, weekly volumes, moving averages, etc.
  • Valuation Overview: This will be the analyst's in-depth analysis of the stock.
  • Key Statistics: All the important statistics of the stock in terms of time value, for example, how an investment of $1000 has performed over a period of 5 years including dividend reinvestment.
  • Earnings and Dividend History: Provides you the recent history of company's revenue, earnings per share, and dividend payouts in a tabular format. This will generally be for five years.
  • Per Share Statistics: This will include all per share statistics, such as earnings per share, payout per share, etc,
  • Financial Statement Analysis: this will include analysis of company's key financial statements including income statement, balance sheet, and cash flow statement.
  • Ratio Analysis: This again is related analysis to financial performance with key ratios such as debt-equity, working capital, return on invested capital, return on equity, and return on assets.
  • Industry Outlook: This will provide an overview of the investment outlook for the industry in which the company operates. This may also cover recent events and developments in the industry.
  • News Headlines: Most recent new headlines for the stock presented in a brief manner.

So, next time when you're looking at a stock report, make sure that the analyst has done a good job and covered all these things.

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