please select a suitable topic of your choice.
Please watch this video full to understand the requirements.
An equity research report is a document that provides a recommendation on whether investors should buy, hold, or sell shares of a public company. Additionally, it provides an overview of the business, the industry it operates in, the management team, its financial performance, risks, and the target price.
You have to go and select one of the Dow Jones industrial Index of the largest listed US manufacturing firms. The accounting and finance data about the index and the firms listed in this index can be found in either “YAHOO FINANCE” or “GOOGLE FINANCE”. https://finance.yahoo.com/ OR https://www.google.com/finance.
In general, when you need to choose your subject firm you have to avoid firms that have not distributed dividends and should have positive free cash flows (avoid firms with negative FCFs). Amazon, Apple, and Microsoft companies should not be chosen at all for your project. They are high tech firms which are not suitable for your project and also some of them have not distributed dividends in the past several years.
The contents of an Equity Research Report are as follows:
Recommendation – Typically to either buy, sell, or hold shares in the company. This section also usually includes a target price (i.e., $47.00 in the next 12 months).
Company Update – Any recent information, new releases, quarterly or annual results, major contracts, management changes, or any other important information about the company.
Investment Thesis – A summary of why the analyst believes the stock will over or under perform and what will cause it to reach the share price target included in the recommendation. This is probably the most interesting part of the report.
Financial Information & Valuation – A forecast of the company’s income statement, balance sheet, cash flow, and valuation. This section is often an output from a financial model built in Excel.
Valuation – The evaluation of the firm should be done by at least two methods (such as the free cash flow method, dividend discount model method, enterprise to EBITDA method or/and other common equity evaluation methods). You may be required to find the cost of capital of the subject firm. This can be done by going to http://finance.yahoo.com. Under “Market Summary”, you will find the yield tp maturity for 10-year Treasury bonds listed as “10 Yr Bond(%)”. Collect this number as your risk-free rate. Then you can use it in the CAPM equation to calculate the cost of equity capital. To get the cost of debt you need to find the market value of the firm’s long term debt and then you have to find the price and yield to maturity on the firm’s existing long term bonds. Go to http://www.finra.org. Click on “investors” and then on “Market data” and after that click on “Bonds”. Under Quick Bonds Search” click “Corporate”, type the symbol of the subject firm and click search. After the results come up, use the yield to maturity on non-callable 10-year obligations as its cost of debt capital.
Risk & Disclaimers – An overview of the risks associated with investing in the stock. This is usually a laundry list that includes all conceivable risks, thus making it feel like a legal disclaimer. The reports also have extensive disclaimers in addition to the risk section.
For more about the content please go and look at the following link:
https://corporatefinanceinstitute.com/resources/knowledge/valuation/equity-research-report/
