What does an Equity Analyst do?

Harriette Halepis

An equity analyst studies and analyzes companies in order to determine a company's overall financial worth. Analysts arrive at the complete financial value of a company by scrutinizing financial reports and conducting interviews with company management and industry professionals. Equity analysts are usually employed by those seeking sound investment knowledge.

An equity analyst is expected to keep up-to-date with current trends within a particular industry.
An equity analyst is expected to keep up-to-date with current trends within a particular industry.

Securities firms, banks, mutual funds, hedge funds, pension funds, and insurance companies all heavily rely upon equity analysts. Since analysts determine a company's worth, an analysis conducted by an equity analyst can also determine whether or not a company is considered an investment risk.

In addition to evaluating a company's present financial value, equity analysts also consider the future worth of a company. Determining a company's future financial value is concluded based upon financial statements, sales, costs, commodity prices, and tax information. Analysts will also often meet with management in order to gain a better overall financial picture.

While an equity analyst is often assigned specific company profiles to work on, he or she will also take a broader approach. By studying one particular industry as a whole, an analyst can gain a large understanding of a particular company. Comparing various companies within an industry to one another will provide an analyst with a complete financial view of a specific industry. In turn, this will help to create a comprehensive company profile.

Further, an equity analyst is expected to keep up-to-date with current trends within a particular industry. Keeping track of the present economic state of a country is an integral part of an equity analyst's job. Even though a large portion of an analyst's job requires reviewing printed statistical information, financial software is also widely used.

Once an equity analyst has gathered all possible data relating to a company, he or she will compile a complete report. Upon completion of the report, a presentation is often presented to an analyst's employer. The information contained within the presentation will determine whether or not a company represents a solid financial investment.

Education-wise, equity analysts often have a background in accounting. Some analysts also have a Master of Science in Finance or a Master of Business Administration. In addition to proper educational certification, most analysts have a large amount of industry experience. In recent years, a form of professional certification has been necessary in order to secure an equity analyst position. This type of certification includes Chartered Financial Analyst accreditation or a Certified International Investment Analyst certification.

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Discussion Comments

anon954400

@nanny 3: I can tell you their secret: create a product / services that meet the needs of demand in the marketplace.

Eviemae

So finance analyst work for independent companies themselves, or do they work with a specific financial analysis firm that gives them certain clients to work on.

For instance, many lawyers work for firms and are given certain clients and cases to work on. Is this how financial analysts work as well?

Or, is it simply a matter of choice?

nanny3

I was reading recently that eBay is projected to be worth about $12 billion dollars by 2013 (I think this is about right) and that PayPal, which branches off of eBay, is projected to be worth even more!

I wonder what their finance analyst make a year, and if they’d consider hiring a poor college student on. I have mad skills in adding, subtracting, multiplying and – you guessed it – dividing!

Seriously, though, isn’t it amazing that in hard times these big corporations are racking in billions? Makes you wonder what the secret is...

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