Financial Modeling for Equity Research
A Step-by-Step Guide to Earnings Modeling

    ​​This book written by John Moschella, the founder of Gutenberg Research, demonstrates step-by-step how to create a financial model. The accompanying Excel files demonstrate the key concepts and can be used as templates to create an earning model for nearly any company. Readers without prior financial analysis experience will gain a fundamental understanding of exactly what modeling entails, and will learn how to create a basic form of an earnings model. Advanced readers will be introduced to more complex topics such as linking the financial statements, future period calibration, and incorporating macroeconomic variables into discounted valuation analysis through the equity risk premium and application of the capital asset pricing model.
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This book includes the following Excel files: 
  • File 1 - Blank Model Template
  • File 2 - Apple Inc Back of the Envelope Model
  • File 3 - Apple Inc Tier 2 Earnings Model: This version of the model is more sophisticated and includes a breakdown of the company's products, which is used to project future earnings. 
  • File 4 - Apple Inc Tier 1 Earnings Model: The Tier 1 model is geared toward advanced analysts and includes financial statement integration, as well as a discounted cash flow valuation. 
  • File 5 - Equity Risk Premium (ERP) Model: Using this simple model you can quickly estimate the market ERP based on volatility, changes in interest rates, and market return expectations. You can then derive a discount rate using your ERP estimate, and the Capital Asset Pricing Model (CAPM). 
  • File 6 - Apple Inc Beta Calculation
  • Files 7 & 8 - Regression Models
This book is perfect for... 
  • Business Students: Whether you are majoring in Finance, Accounting, Marketing, Entrepreneurship, or Management, learning the fundamentals of forecasting is critical to your academic development, and will help prepare you for a professional career. 
  • Sell-Side Equity Research Analysts: Need a fresh perspective for your models? Consider adding changes in volatility, interest rates, or corporate tax reform to your valuation approach. Or incorporate non-GAAP adjustments, and forecast the impact of new accounting standards into your models. 
  • Financial Planners and Wealth Management Professionals: Have your clients been asking your opinion of a stock in the headlines? This book will teach you how to build a model for nearly any company, allowing you to deliver comprehensive analysis to your clients. 
  • Buy-Side Analysts: Want a consensus-based model to compare to that of each analyst? This book demonstrates how to create one, and how to use it to perform quick reviews of consensus estimates, management's guidance, and run powerful scenario analysis ahead of an earnings release. 
  • Investor Relations Professionals: Gain valuable insight into how the analysts covering your company are modeling your results, and use this knowledge to predict what the analysts will ask on the conference calls. 
  • Private Equity/Venture Capital Analysts: Trying to value a new investment with unpredictable cash flows? Use this book as a guide to build a dynamic model, and incorporate various inputs to create upside/downside scenarios. 
  • CPAs: Improve your analytical procedures. Use your model output to plan your audit, and develop questions for your walkthroughs with management. Or expand your skill set and prepare for a career change.
  • Business Column Writers: Learn how to back up your articles with quantitative support.
  • Professors: Share some practical modeling tips used by equity analysts with your class.
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