How to perform an investment analysis of a company

To choose which company's bonds or stocks to purchase, an investment analysis is conducted. It consists of 5 main steps.

How does the company earn money? Where is the main part of the profit generated from? Who are the main clients? Usually, this information can be found on the company's website if it issues stocks or bonds. For example, Google receives 97% of its revenue thanks to advertising.

First of all, understand the environment in which the company operates, which sector it is, and what is happening there now. What is the market size? What is the growth rate? This way, you can better predict your future income and assess the reliability of the securities. For example, in the equipment leasing industry, growth is expected in the coming years, as our clients include enterprises from the agricultural and construction sectors, which are currently developing even more actively in Ukraine.

Alright, let's assume the industry of the chosen company is growing at a significant pace. But will the company's profits increase accordingly? To find out, assess its competitiveness.

Now it is necessary to evaluate whether the company is profitable and what the revenue growth rate is. Next, divide the income into recurring and one-time. Find out what recurring income the company receives and how stable it is. Also, analyze the debt load.

Pay attention to what strategic goals the company sets and what forecasts it provides. In our view, these 5 stages of company analysis are among the most important; it is worth starting a company analysis with them. However, there are many other factors to consider before purchasing stocks or bonds.