No, this is not a topic on various sadistic inclinations that some fellow finance professionals might have.
I simply wanted to learn what is your "favorite" piece of analysis when looking at a company's equity (or any other part of the capital structure for that matter) - it can be anything from a simple ROIC calculation to something more involved (somewhat) like calculating the EBIT (or EBITDA) break-even product quantity.
I'll start off with a couple of examples and will return to to the thread later to add a few more.
1. Charting the company's share price versus various headline financial statement numbers (e.g. share price vs. EPS (adjusted) vs. CFO per share (PS) vs. FCFPS vs. DPS vs. TNAVPS etc.). It is useful for two things - understanding what the stock "trades on" and when the share price deviates from company fundamentals.
2. A quick short-hand to better understanding earnings quality - the CFO/Net Income (Adjusted) ratio.
Fire away!
This is probably obvious, but yield per turn of leverage for credit investments
At our firm, for each target we always calculate a whole bunch of metrics and compare them to similar assets that we already have. E.g. if we already own retail food chain and looking at another, I will compare every possible relevant metric: revenue and EBITDA per visit, per employee and per square meter of owned / rented space, average salary, maintenance capex per square meter and per dollar of EBITDA etc etc. Every deviation in metrics from existing assets must be thoroughly analysed and explained in internal Investment Committee memo.
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Mapping out historical and forward earnings / EBITDA multiples using analyst consensus or my own projections. It paints a good picture of how the market has viewed the company over a period of time and allows you to look at performance under different economic cycles.
EBITDA multiples, and more importantly EBITDA margin, FCF (both historical and projected), ROCE, I am in corp dev and those are the metrics our management team is focused on (ROCE impacts compensation as well)
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