How to analyse a company
Over the past few weeks, we have, in this column, explained facets of fundamental analysis. But where, as some of our readers have asked, is the information on financials, corporate plans and histories required to analyse a company, available? Here's listing a few sources you can tap for the same.
Announcements and reports
The first source would be the documents and updates that companies themselves put out. Take the annual report. These are usually treasure troves of information on financials, material developments through the year, management strategies and outlook. The how-to guide for reading annual reports has previously been detailed in this column. An added bonus in annual reports is the industry analysis, which appears in the Management Discussion and Analysis segment.
Next, companies routinely make announcements about their operations such as orders secured; clients added, deals signed, mergers and acquisitions, and so on. Reading up on these will allow you to keep track of the developments in your company. Quarterly results announcements are sometimes accompanied by an additional release which gives a background on results.
Talking of company announcements brings us to the websites of stock exchanges and there's a lot to glean from these! The BSE and NSE websites give broad market information such as historic index levels with price-earnings multiples for a few indices, bulk deals, turnover and volumes, and even a basic guide to main concepts. Stock-specific data includes historic stock prices, volumes, shareholding patterns, financials and corporate actions, annual reports and much more. Price-earnings multiples of key indices such as the Sensex are also available.
Most companies have their own websites, which can be quite informative. General information about the company, such as the products it offers, its history since inception, significant milestones, management and board can be useful in developing an understanding of the company. Some companies go to greater lengths than others in offering important and relevant information on their websites. For instance, the website of Shoppers Stop provides transcripts of analyst conference calls. Annual reports, quarterly result reports, shareholding patterns, investor presentations can also be found on company websites.
Finally, there are other websites such as www.myiris.com, which contain a wealth of information. In myiris, for example, research reports put out by brokerage houses are available. Main ratios such as return on investment, margins and debt ratios are already calculated, saving you the trouble of doing so. Data is available for up to five previous years. Mutual funds holding the stock are also listed. And what's more, all this data, together with management interviews (where available) on such websites is grouped stock-wise, making it easier to collate information.
This brings us to the final important information source - the simple news item. Keeping an eye out on the happenings in the business world could help you track material developments in your company or industry. Here's a tip - you can program weekly Google alerts with relevant key words and catch up on your reading over the weekend!