Writing a Research Report

 Produce a research report consisting of no more than five pages of textual analysis plus supporting documents.  Supporting documents, such as tables may include no more than five more pages.  The research report itself should have the following components, or other subheadings that include similar information:  (You may include a cover page in addition to the page limits described above. )

• Investment Summary
• Valuation, including Relative Valuation and Discounted Cash Flow Valuation
• Business Description
• Industry Overview
• Competitive Positioning
• Earnings Analysis
• Investment risks

 Note: Indicate where your data came from. There are many sources of information about companies, and you are free to use any of them as long as you properly indicate what you have used.  However, passing off the work of others as your own is plagiarism and is unacceptable in this competition.  You are expected to do your own analysis.

I suggest that you should be looking at the NYSSA template for guidance (http://pages.stern.nyu.edu/~aim/) as well as the James Morris research report on General Mills.

Summary

Business concept
Current situation
Key success factors
Financial situation/needs

Vision

Vision statement
Milestones

Market analysis

The overall market
Changes in the market
Market segments
Target market and customers
Customer characteristics
Customer needs
Customer buying decisions

Competitive analysis

Industry overview
Nature of competition
Changes in the industry
Primary competitors
Competitive products/services
Opportunities
Threats and risks

Strategy

Key competitive capabilities
Key competitive weaknesses
Strategy
Implementing strategy

 

Products/services

Product/service description
Positioning of products/services
Competitive evaluation of products/services
Future products/services

 

Marketing and sales

Marketing strategy
Sales tactics
Advertising
Promotions/incentives
Publicity
Trade shows

 

Operations

Key personnel
Organizational structure
Human resources plan
Product/service delivery
Customer service/support
Facilities

 

Creating the financials of the business plan

Assumptions and comments
Starting balance sheet
Profit-and-loss projection
Cash flow projection
Balance sheet projection
Ratios and analyses

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Suggestions for a Research Report (from New York Times, November 24, 2002, Sunday, Late Edition - Final, Section 3; Page 1; Column 2; Money and Business/Financial Desk)

• All reports must contain a company's balance sheet and show its income and cash flow for the past two years. They should also include a three-year projection of earnings, cash flow, capital expenditures and working capital needs. Subsequent reports should refer to these summaries.
• A stock should be valued based on its excess cash flow, calculated by taking a company's net earnings and adding its depreciation expense, deducting capital expenditures and considering changes in working capital. "Any other metric," Mr. Olstein said, "whether page views, hidden assets, multiples of revenues, must be converted to excess cash flow." The cash flow that an analyst projects for future years should be discounted to reflect that money a company earns today is more valuable than money it might earn in five years.
• There should be no buy or sell recommendations. Reports should state whether the stock, based on cash flow projections, is undervalued, fairly valued or overvalued.
• All reports should state: "Accounting reporting and disclosure practices at this company have been reviewed and any material deviations in working capital and liquidity ratios or reporting practices that in the analyst's opinion are not in accord with economic reality have been discussed in this or prior reports."
• Earnings estimates should be made annually. Quarterly earnings should be analyzed only to determine whether they require any change to a stock's future valuation. "What is critical is not whether a company made the quarter by a penny or missed by a penny, but whether the quarter has done anything to change the long-term value of the company," Mr. Olstein said.
• Analysts should be barred from sending executives advance copies of reports on their companies.
• Stock price targets should be banned.
• Potential risks to cash-flow forecasts and valuations should be discussed in detail.
• When valuing a company, analysts must subtract so-called nonrecurring write-offs, or charges, from reported operating earnings. "Companies like to categorize prior accounting assumptions that were overly optimistic as nonrecurring write-offs," he said. "Analysts should not follow suit."
• Analysts should be rewarded, not punished, for issuing "overvalued" ratings, when appropriate.

Preparing a Valuation Spreadsheet

Decide which of Damodaran's spreadsheets you want to use.

For each entry, add a comment that indicates where you got it from, and/or supporting arguments for your choice.  Using the comment feature in Excel allows you to write as much as you wish without running out of space.  If you decide to write your comment in a spreadsheet cell, then make sure you write it in a different color, so that it stands out from the other material.