ICM334-Modelling Skills for Equity Analysis
Module Provider: ICMA Centre
Number of credits: 10 [5 ECTS credits]
Level:7
Terms in which taught: Spring term module
Pre-requisites:
Non-modular pre-requisites:
Co-requisites: ICM331 Securities and Investments
Modules excluded:
Current from: 2023/4
Module Convenor: Dr Mike Smith
Email: m.j.smith@icmacentre.ac.uk
Summary module description:
Unique to the Investment Management and Masters in Finance Programmes, this module is delivered by Financial Edge, the leading financial training company responsible for training the analysts of the 4 leading global investment banks. The aim of the module is to equip students with the practical skills required to enter a role within an investment bank or buy side investment house equity analysis team. The module will develop students’ modelling and valuation skills utilising real company financial information. Participants will build an integrated three statement model and utilize relative and intrinsic valuation methodologies, to analysing a peer group of real companies. The module is taught using best practice techniques and the practical skills can be applied directly to the workplace. Students will write an equity research report, building an investment thesis and making investment recommendations. Participants will also receive certification by Financial Edge.
Please note that any questions regarding this module, technical or otherwise, should be addressed to Jonathan Rugg, who is the instructor- Jonathan.rugg@fe.training
Aims:
Equip students with the practical skills required to enter a role within an investment bank or buy side investment house analysis team.
Develop student’s modelling and valuation skills using financial statements from a peer group of real companies.
Equip students with the skills necessary to develop and investment thesis and communicate that through a research report.
Assessable learning outcomes:
Students will be able to:
- Write a 2,000-3,000 equity research report, making investment recommendations.
- Build an investment thesis, analysing a peer group of real companies.
- Explain the earnings adjustments made by equity research analysts.
- Build out a fully integrated three statement valuation model.
- Apply relative and intrinsic valuation methodologies.
Outline content:
- Principal financial statements, long-lived assets, capital structure and financing/debt, taxes and losses
- Financial Statement Analysis – with a focus on cleaning earnings (EBIT & EBITDA) for valuation
- Introduction to modelling, and building a 3-statement model with iterations, as a basis for developing intrinsic and relative valuation.
- Equity value to enterprise value bridge
- Trading comparable valuation
- Discounted cash flow valuation
- Bringing it altogether: Making investment recommendations, writing an equity research report
Global context:
The module will have a global focus and applicability with the financial analysis involving a peer group of global companies.
Brief description of teaching and learning methods:
The module will be delivered by a series of lectures and seminars, requiring students to undertake further reading and group work.
Summative Assessment Methods:
| Method |
Percentage |
| Report |
100 |
Summative assessment- Examinations:
The below information applies to students on taught programmes except those on Postgraduate Flexible programmes. Penalties for late submission, and the associated procedures, which apply to Postgraduate Flexible programmes are specified in the policy “Penalties for late submission for Postgraduate Flexible programmes”, which can be found here: https://www.reading.ac.uk/cqsd/-/media/project/functions/cqsd/documents/cqsd-old-site-documents/penaltiesforlatesubmissionpgflexible.pdf
The Support Centres will apply the following penalties for work submitted late:
where the piece of work is submitted after the original deadline (or any formally agreed extension to the deadline): 10% of the total marks available for that piece of work will be deducted from the mark for each working day (or part thereof) following the deadline up to a total of five working days;
where the piece of work is submitted more than five working days after the original deadline (or any formally agreed extension to the deadline): a mark of zero will be recorded.
The University policy statement on penalties for late submission can be found at: https://www.reading.ac.uk/cqsd/-/media/project/functions/cqsd/documents/cqsd-old-site-documents/penaltiesforlatesubmission.pdf
You are strongly advised to ensure that coursework is submitted by the relevant deadline. You should note that it is advisable to submit work in an unfinished state rather than to fail to submit any work.
Summative assessment- Coursework and in-class tests:
The module will be assessed by way of a 2,000-3,000 word individual equity research report submission. Submission deadline end of the Spring semester.
Penalties for late submission:
The below information applies to students on taught programmes except those on Postgraduate Flexible programmes. Penalties for late submission, and the associated procedures, which apply to Postgraduate Flexible programmes are specified in the policy “Penalties for late submission for Postgraduate Flexible programmes”, which can be found here: https://www.reading.ac.uk/cqsd/-/media/project/functions/cqsd/documents/cqsd-old-site-documents/penaltiesforlatesubmissionpgflexible.pdf
The Support Centres will apply the following penalties for work submitted late:
- where the piece of work is submitted after the original deadline (or any formally agreed extension to the deadline): 10% of the total marks available for that piece of work will be deducted from the mark for each working day (or part thereof) following the deadline up to a total of five working days;
- where the piece of work is submitted more than five working days after the original deadline (or any formally agreed extension to the deadline): a mark of zero will be recorded.
The University policy statement on penalties for late submission can be found at:
https://www.reading.ac.uk/cqsd/-/media/project/functions/cqsd/documents/cqsd-old-site-documents/penaltiesforlatesubmission.pdf
You are strongly advised to ensure that coursework is submitted by the relevant deadline. You should note that it is advisable to submit work in an unfinished state rather than to fail to submit any work.
Assessment requirements for a pass:
Reassessment arrangements:
Re-sit research report
Additional Costs (specified where applicable):
Last updated: 23 January 2024
THE INFORMATION CONTAINED IN THIS MODULE DESCRIPTION DOES NOT FORM ANY PART OF A STUDENT'S CONTRACT.