Equity Research

In financial world most investors and investment decisions are totally dependent upon the accurate information. So these decisions may include which company to be invested into, when to come out from particular stock, what has to be stop loss etc. In order to find out answers to these questions, there are special divisions formed under financial intermediaries and these divisions or departments are called as Equity Research divisions.
In short equity research is a study and analysis of equities or stocks for doing investments. It also includes research on commodities, bonds.

Who is involved in this Equity Research?

The person who carries out this analysis is called an equity researcher, and his job includes carrying out detail analysis of a company, entity or sector. The information provided by equity researcher is used by investors (to decide how to allocate their funds), by Private Equity firms, investment bank (to value companies for mergers, LBOs (Leveraged Buyout), IPOs (Initial Public Offering) etc).
Generally an equity research department is divided into departments, to cover the various sectors of market eg. banking, mining, I.T., energy, healthcare, consumer sectors.

Note: Become an Equity Analyst
Learn to analyze securities information and be a part of the financial investment process. Determine a Buy or Sell call on securties trading in the market. Live application of valuing a company’s share.

What Exactly do We Do In Equity Research training course?

As discussed, the team/ individuals are delegated with the work of covering different sectors in a market for performing research activity. The work consists of research, reporting and projections.
Research work consists of analysis of company, competitors and the industry. Also Forecasting or Projections for finding out future value of companies will be carried out.

Equity Research Methods

To carry out Equity Research analysis two methods are used namly

Fundamental Analysis – Fundamental Analysis deals with finding out intrinsic worth of a company stock, financial strength and comparing it with the market price to identify whether that stock is more or less in weight age as compared to the market value. In technical language whether the stock is overpriced or under priced.

For better results, analyst would suggest buying financial security if it is underpriced and sell if it is overpriced because there is a possibility that the market price will be equal to intrinsic worth of the stock.

Technical Analysis – Technical Analysis is the study of past price changes in the hope of forecasting future price changes. It is mainly considered by carrying out two factors which is price and volume. It is generally observing the trend that how the stock price is moving i.e. whether it is going upwards, downwards or in the same limit range. This is very simple technique of predicting the price movement as per the past performance.

Steps in Equity Research Process

Equity research process comprises of multiple steps.

  1. Economic Analysis
  2. Understanding Industry or sector analysis
  3. Company Analysis for investment purpose
  4. Financial Statement Analysis of a Company
  5. Performing Financial and Valuation
  6. Writing Report showing the result of analysis
  7. Presentation or recommendation