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No. of Recommendations: 16
For folks who are brand new to analyzing companies, here are some ideas for how to go about it. There isn't any "one right way" to analyze a company, so you'll eventually settle into a routine that works for you. At the end of the day, what matters is your conclusion. This is just what I tend to do, and even then it's not hard-and-fast.

I'd also love to hear what others are doing!

Note: at each step along the way, I keep notes, and I rely on them heavily when writing up my thoughts later. I personally like to keep them on a computer so that I can quickly search for what I'm looking for.


Annual Report (Form 10-K)
I like to start with the company's annual report (form 10K). You can often get this from the company's investor relations website, but if you don't see a recent one then you can always get them straight from the SEC using their EDGAR system. Just go here and type in the company's ticker on the right-hand "Fast Search" box to see a list of all of the company's filings:

https://www.sec.gov/edgar/searchedgar/companysearch.html

The far-left column is the form number. You want 10-K for annual reports and 10-Q for quarterly reports. You might see a lot of forms, and if you're having trouble finding the 10-K then you can type "10-K" into the "Filing Type" search box above the list of forms on the left, and then click the Search button on the far-right side. You can do that with any form type, obviously.

Near the beginning of the annual report you'll almost always find a section that provides a summary of the business and a nice overview of the company. There will also always be a section on "risks" and those are good to go through. Many of these are boilerplate ("our stock price might be volatile"), but you'll also usually see some that are specific to the business or shed more light on the business (for example, that they're totally dependent on just a couple of customers). Then you'll get into the financials, which I'll usually just skim at this point looking more for things like breakdowns of revenues by geography or business segment that, again, lend some high-level insight into the business. And then you'll get into management's notes, which is kind of like the original business summary on steroids -- it talks more specifically about actual business performance, and what drove that performance in management's opinion.

Earnings Calls
Then I like to go read earnings calls transcripts. I usually get these from Seeking Alpha, though sometimes the company will offer transcripts too (which are usually higher quality). You can also sometimes find archived webcasts of recent calls on the company's website if you want to actually listen to the call, which can also be interesting and give more color on how management handles themselves or whether they're excited about the business or ho-hum, etc -- but it also takes a lot longer than cruising through a transcript.

I'll usually start with the company's most recent fiscal Q4 call, as that corresponds to the annual report I just went through. And then I'll move forward through the calls from there. But if I ran into an interesting event or transitional point in the annual report, then I might start at that point and move forward to get some more color -- it just depends. Also, if there was a major acquisition then the company will often do a special call just for that when it's announced, and I'll go through those. If they didn't, then I'll go through the first call after the acquisition hoping to get more color.

After I've caught up to the present day on the calls, I'll sometimes go back to earlier ones. It depends on whether I think it'd be helpful.

Quarterly Reports (Form 10-Q)
Next I'll start going through the quarterly reports published since the annual report and get caught up on those. I've already gone through the earnings calls, so I have an idea of what to expect and some context. But this provides a more formal view. And if I'm curious about something that happened in the past, I'll go dig up the quarterly report for that to get some more context.

Young Companies: Prospectus (Form S-1)
For companies that have IPO'd fairly recently, you won't necessarily find a lot of history in the annual or quarterly reports. So in that case, I'll also go through their Prospectus. This is a document they published ahead of their IPO, and it will contain a lot of interesting and historical business information. These are on the SEC website as form S-1.

Financials
Now I'll start to look at financials in the annual and recent quarterly reports and see if they more or less jibe with my understanding of the business at this point. I'm not an accountant and I'm not the kind of person to bust out Excel and start creating models (if you're that kind of person, though, there's nothing wrong with that!). Mostly this step is a sanity check for me to make sure I'm seeing what I would expect in the numbers, and that there isn't anything that might give me pause.

Proxy Statement (Form 14A)
The proxy statement is a form a company files each year ahead of their annual meeting. On the surface, it's about which members of the board of directors are up for election, which issues shareholders are to vote on, etc. But it also contains a lot of information on the senior managers and members of the board, and that's what I'm primarily after if I go through this document. Tom Gardner calls it the "people form." It can provide a nice starting point for getting to learn more about management, and then you can do further research from there if you think it's needed.

Forming an Opinion
I personally like to form my initial opinion before I read what anyone else thinks or is saying. So I will usually write up my initial thoughts at this point. If I don't feel like I have enough understanding to do that, then I'll do more research at this point (for example, into the industry in which the company operates to get more familiar with it).

Looking at Other Opinions
Now I'll go and look at what others are saying. I'm not really so much interested in their conclusions, but rather if I've missed something: a bull or bear case that never occurred to me, or some insights into the industry or business that I wasn't aware of. This step could involve reading Fool boards and official coverage (if it's an MF rec), public MF articles, Seeking Alpha articles, and maybe even some analyst pieces (though I tend to be pretty skeptical of Wall St. analyst opinions in general).

Final Writeup
Now I'll expand on my initial thoughts (and refine them if warranted), and do my full writeup. When it comes time, I'll post it.


Anyway, that's generally what I do. But I'm just beginning and learning like everyone else :-) What are other folks doing?

Neil
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