How to research a stock (analysis introduction)

To help you identify good long-term investments we provide you with a detailed fundamental analysis on every listed company presented as an easy to understand infographic.

The analysis uses institutional quality data from Standard and Poor’s Capital IQ and performs 30 checks across 5 different areas. Over 1,000 data points are used to analyse each company and these are updated every 6 hours.

The full documentation explaining our analysis can be found here.

What's included in our analysis?

1. Value

Are you paying a fair price for the stock? Is the company undervalued compared to others in the same industry?

We help you answer questions like these by using Discounted Cash Flow calculation, PE, PB and PEG ratios and comparing them inside the industry and the market.


2. Future performance

How will the business perform in 3 years? Will it grow significantly? How effective will it be in using shareholders’ money to create profit?


We don’t attempt to predict future share prices (it never works anyway). Rather we focus on future estimates of Revenue, Cash flow, Earnings and Return on Equity by professional analysts following the company.


3. Past performance

Is the current drop in earnings just a one-off thing? Has the company been effectively utilizing its resources to create profit?


We look at metrics like EPS growth, Return on Equity, Return on Capital and Return on Assets over the past 5 financial years to help you understand if the company has been a well functioning business.


4. Financial Health

Is the level of debt dangerous to the stability of the company? Can it meet its short term commitments? Are the interest payments well covered by earnings?

Analysing the balance sheet can be a nightmare for a non-professional investor. We do it for you and focus primarily on the amount of debt to make sure you don’t get burned.

(Note: we use a different financial health analysis for Banks and Financial Institutions.)


5. Dividends

How does the annual yield compare to market? Can the company afford to keep paying the current level of dividend in the next 3 years? Has it been stable for the last 5 years?

We look at the level of dividend payment and compare it against other dividend payers. In addition, we also analyse the volatility and sustainability of the dividend


6. Management

Does the CEO and the board have enough experience to take the company through the rough times? Are company insiders selling?


While not being part of our core analysis, we still think it is important to consider. We look into metrics like tenures of the board, reasonable compensations and insider buying/selling.

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