Title Equity Analysis

Lecturer Dimitris Andriosopoulos

Code AG938 Semester 2 Weeks 1–5 Credits 10
Assessment Examination Coursework 70% Test 30%
Finance Option Int. Banking Optio Investment Core Int. Accounting Option
& Fin. n & Fin. & Fin.

CLASS AIMS
This module focuses on equity valuation. The aim is to equip students with the knowledge and
tools required for analysing the financial performance of firms and measuring their value. Students
will be skilled in reviewing financial statements, estimating and assessing financial ratios and
relevant accounting and economic data, and use this data for making forecasts and perform equity
valuations. In addition, the module will cover the theoretical background for each valuation
method and their application with real life examples and case studies. Also, the module will
examine the advantages and disadvantages of the main valuation models. Finally, the ultimate
goal is for students to be able to perform and deliver and equity analysis report for any publicly
listed firm.

LEARNING OUTCOMES
The class provides opportunities for students to develop and demonstrate their knowledge,
understanding and skills in the following areas:

i) Knowledge Based Outcomes:

On completion of the class students will be able to:
 Develop a good understanding of the nature of equity investments.
 Provide a good working knowledge of the historical returns and risks associated
with equity investments.
 Have a good understanding of the theory that relates the expected return to the
risk exposure of the investments.
 Develop the ability to forecast future performance.
 Develop a good understanding of the various models put forward to assess the
value of equity.
ii) Skills Outcomes:
On completion of this class students should be able to demonstrate that they:
 Are able to deal with problems that require forecasting outcomes in the context of
incomplete information and to explain the rationale for proposed decisions.
 Students will understand some of the most important quantitative techniques and
well-known profitable strategies in equity markets.
 Critically assess the pros and cons of different valuation methods and modelling.
 Use current and historical information to estimate the value of private or publicly
listed firms and deliver a comprehensive equity analysis report.

TEACHING AND LEARNING

Teaching will be by three contact lecture hours per week for 5 weeks. Students are expected to
undertake both independent and directed learning, by reading the relevant chapters, questions
and case studies in advance of lectures, and by working through additional questions during the
lectures. This module builds on the core class "Principles of Finance" and will provide an in-depth
analysis and application of different equity valuation techniques. This module is structured from
the viewpoint of investors and analysts. Finally, it will be a hybrid between theory and practice
using case studies during lectures.

ASSESSMENT
1. A group assignment (2-3 persons; no single-authored reports and no more than 3 persons per
team) valuing a publicly listed company. The valuation report and feedback will count for 70%
of the final mark.
2. A class test at the end of the module (after week 5 – date to be confirmed). The class tests will
count for 30% of the final mark. For practice and engagement, a weekly quiz of ten (10)
questions in each quiz, with five (5) quizzes in total to be administered. Each weekly quiz will be
available on Myplace right after each lecture and time limited for 165 hours (i.e. 2pm prior to
the start of the next lecture). These quizzes will be timed (no more than 30 minutes to
complete upon starting the quiz). The weekly quiz will not count towards the total mark and is
for practice and learning only.

If the weighted average mark from the group assignment and the class test is less then 50%, a
reassessment (resit) will be via an additional equity analysis report (on a different company from the
one analysed in the first report) at 100% of the final mark.

READING
Core readings
 Bodie Z., Kane, A. and Marcus, A.J., "Investments", 12th Global Edition, McGraw Hill, 2021.
ISBN: 9781260013832.
 Bruner, R.F., Eades, K.M. and Schill M.J., “Case Studies in Finance”, 8th Edition, McGraw Hill,
2018. ISBN: 9781260083262.

Alternative readings
 Damodaran, A. “Investment Valuation: Tools and Techniques for Determining the Value of any
Asset”, University Edition, 3rd Edition, Wiley, 2012, ISBN: 9781118011522

It is not required to purchase the textbooks, but note there are limited copies (Bodie et al. or Damodaran)
in the library. The designated Case Studies are essential for the course. Scanned pages are available via the
reading list on MyPlace. A special e-book containing only the designated case studies will be available
(information will be updated on MyPlace) from McGraw-Hill.

 Research papers as handed out in the “reading list” section on MyPlace.

 Financial Times.
 The Economist.
 Relevant news and web-based readings available in MyPlace.

LECTURE PROGRAMME - (Onsite only format)
Wee Lecture Subject/Content Readings
k
Bodie et al. Ch 1, 17, 28.1
L1. A: Introduction to Valuation
Or
L1. B: Strategy, Macroeconomic, and
Live session Damodaran Ch 1, 2, 6
Industry Analysis
1 (19 Jan, Case 1. Warren Buffet
L1. C: Valuation and ESG
14.00-17.00)
Research Paper: Short
Case Study / Research Paper Discussion
Sellers
L2. A: Return concepts Bodie et al. Ch 5, 9, 11.
L2. B: Asset pricing models and required Or
Live session
return Damodaran Ch 4, 7, 8
2 (26 Jan,
L2. C: WACC in practice
14.00-17.00)
Research Paper: Investor
Research Paper Discussion Horizons
Bodie et al. Ch 18.
Or
L3. A: Discounted Dividend Model Damodaran Ch 11-14
Live session
L3. B: Discounted Cash Flow
3 (2 Feb,
Case 13. Royal Mail
14.00-17.00)
Case Study / Research Paper Discussion
Research Paper: Are
Foreign Investors locusts?
Bodie et al. Ch 19.
Or
L4. A: Multiples and Financial Statements
Damodaran Ch 17, 18
Live session L4. B: Relative Valuation
4 (9 Feb,
Case 10. Best practices
14.00-17.00) Case Study / Research Paper Discussion
Research Paper: Is it time
to get rid of EPS?
Lecture slides &
Damodaran Ch 24
Live session L5. A: Residual Income
5 (16 Feb, L5. B: Private Company valuations Case 46. Ferrari
14.00-17.00) Case Study / Research Paper Discussion
Research Paper: Valuing
IPOs