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Lundolm & Sloan. Equity Valuation and Analysis with eVal. 3rd Edition Chapter 2 slides
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Chapter 2 Equity Valuation and Analysis Page 1 of 6
Equity Valuation and Analysis – Lundholm & Sloan
Chapter 1 – Information Collection
Company Data
Most significant step in the information collection process
SEC filings (complete list on page 19)
Filing/ Form Description 10-K Annual Report
10-Q Quarterly Report for 1st, 2nd, and 3rd quarters 8-K Current Events Report – Some examples: Entry into a Material
Definitive Agreement, Material Impairments, Changes in Registrant's Certifying Accountant, Amendments to Articles of Incorporation or Bylaws, Change in Fiscal Year
Proxy (DEF 14A)
Notification of matters to be voted on at the annual shareholder’s meeting (also often contains other information including executive compensation)
S-1,2, & 3 Registration Statements
Prospectus Information made for investors in a new security offering
Chapter 2 Equity Valuation and Analysis Page 2 of 6
10-K Contents
Item Description 1 Description of the Business
2 Properties 3 Legal Proceedings
4 Submission of Matters to Vote
5 Market for Common Stock 6 Selected Financial Data
7 Management’s Discussion and Analysis – Results of Operations, Liquidity, Capital Resources, Off-Balance Sheet Arrangements, and Contractual Obligations
7A Disclosures about Market Risk
8 Financial Statements and Supplementary Data (BS-2yr, IS,SCH-3yr) 9 Changes in and Disagreements with Accountants
9A Controls and Procedures
10-Q Contents
o Unaudited and Condensed Quarterly Financial
Statements
o Abbreviated MD&A
Proxy (DEF 14A)
o Notice of annual shareholders’ meeting
o Items to be voted on with Board’s
recommendation on each matter
o Often includes additional information related to:
Executive Compensation
Corporate Governance
Chapter 2 Equity Valuation and Analysis Page 3 of 6
Sources for SEC Filings
o SEC: http://www.sec.gov/edgar/searchedgar/companys
earch.html
o The EDGARSCAN service mentioned in the chapter
does not appear to exist any longer
o Google: http://finance.google.com – you can
search by company name and/or ticker – includes
links to filings
o EDGAR Online - http://www.edgaronline.com/ - fee
based service
o 10KWizard - http://www.10kwizard.com/ - fee
based services – has free trial
Company websites
o Look around for either Investor Information on
home page or a link inside the About Us or
Corporate Information link from the home page –
In most cases will include .pdf copies of filings
o Descriptions of products and new initiatives
o Press releases
o Archived conference calls with analysts (REG FD)
Chapter 2 Equity Valuation and Analysis Page 4 of 6
Financial Press
o Wall Street Journal: http://online.wsj.com
o Online Financial Websites:
Google: http://finance.google.com/
Yahoo: http://finance.yahoo.com/
MSN: http://moneycentral.msn.com
The Motley Fool: http://www.fool.com/
CNN: http://money.cnn.com/
Analysts Reports
o Sell-side vs. Buy-side
o Source for Sell-side (and independent reports)
Investext – UNC Charlotte Subscribes (I think) –
you can enter this service as long as you are
using a computer on campus via this link:
http://library.uncc.edu/electronic/display.php?query=
Business&resource=321&rtype=d&dept=library
Chapter 2 Equity Valuation and Analysis Page 5 of 6
Macroeconomic and Industry Data
In addition to their own unique strategy, many businesses will rise
and fall more based on the economy and their industry
A picture:
Sources of data on the U.S. Economy
o Dr. Ed Yardeni’s Economic Network is no longer free
o Moody’s Economy site (includes FreeLunch):
http://www.economy.com
o Economagic: http://www.economagic.com/
o FedStats: http://www.fedstats.gov/
o White House Economic Statistics Briefing Room:
http://www.whitehouse.gov/fsbr/esbr.html
o Bureau of Economic Analysis: http://www.bea.gov/
o Bureau of Labor Statistics: http://www.bls.gov/
o The Federal Reserve: http://www.federalreserve.gov/
o Forecasts:
Conference Board: http://www.conference-board.org/
Congressional Budget Office: http://www.cbo.gov/
Global Economy
Domestic Economy
Domestic Economy
Economy Sector
Economy Sector
Industry Industry
Company Company Company
Industry
Economy Sector
Domestic Economy
Chapter 2 Equity Valuation and Analysis Page 6 of 6
Sectors and Industries
o Sector – a group of industries that engage in related
activities
o Industry – firms that have similar goods and services
o Example – The Technology Sector includes the following
Industries (in the Hemscott system – See Appendix B):
Computer Hardware
Computer Software and Services
Electronics
Telecommunications
Internet
o There are many different ways to classify Sectors and
Industries including:
North American Industry Classification System (NAICS)
Standard and Poor’s Global Industry Classification
Standard (GICS)
