Quarterly BS and CFS Necessary?
Hi all, will be doing a 2-week long case study for a MM based in APAC next week. Was curious for on-the-job and case study purposes, do you guys build quarterly BS and CFS forecasts? Obviously will do quarterly for income statement until like 2025E, but not sure about the other two statements, given most stocks probably don't move based off of metrics there. Would love to get your thoughts on this. Thanks!
I would not ignore a company's balance sheet, especially in today's kind of environment.
100%. Was more wondering if I still need quarterly or could do annual
Rly depends on the PM /style. 2 weeks is a pretty long time for a case study. To be safe don’t see why not. Would also drive quarterly PnL to 2026
Thanks! Will do a quarterly for BS and CFS until 2026E. Also curious in terms of cases, do you usually do a base + bear + bull and compute the risk reward by upside from base divided by downside from bull? Was thinking to ignore the bull case as it would above the target price, but saw comments online that it could be nice to have as well. Wondering what you think.
Quarterly for a HF, annually for a LO
Great. Will do quarterly until 2026E for all 3 statements then. Also wondering how far back do you usually go for historical financials (sth like last 5 years quarterly? would you still include anything beyond those 5 years)?
Could you elaborate? Honestly can’t tell if this is a jab at LOs, because I am otherwise unsure why you wouldn’t show quarterly BS if it’s a 2 week exercise.
Some longer time horizon LOs will not model quarters. If you are modeling a 2028 exit, what’s the point in modeling 3q’25?
If you’re taking a longer horizon, modeling annuals arguably makes it easier to focus on / understand what actually matters for the model.
Everyone will have different expectations. I work at HF and would forecast IS quarterly until 25E, annually for BS/CF until 26. Valuation using 26 numbers.
Personally no idea what the point of quarterly 26 numbers is given will have zero visibility intra quarter on that. I’d only do BS intra quarter if something to do with capital return / capex / working capital etc is important for the thesis. If it’s some standard capex light company with recurring revenue and close to 100% FCF conversion, I really wouldn’t bother intra quarter but that’s just me. Different if it’s some crappy oil and gas company building out new projects and if everyone cares about the divi / FCF
Thanks for the insights; appreciate it. Curious in terms of cases, do you usually do a base + bear + bull and compute the risk reward by upside from base divided by downside from bull? Was thinking to ignore the bull case as it would above the target price (base case), but saw comments online that it could be nice to have as well. Would be great to get your thoughts
Have bull / base / bear case individually with target price. Have a blended avg of all to give you your blended target price.
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