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From One-On-One Research

There are different report types and they age at different rates. There are several types of research reports and in many cases the data within them age at different rates. We describe 6 different report types in the paragraphs below and give our view as to their value and the length of time they may remain applicable to the stock.

The focus of many financial institutions is the impact of the research content rather than the form of the report. Because research has rarely been run as a standalone business, not many people think of research reports as a “product line”. You will rarely see the type of research mentioned – just the topic of the research.

Once you have read these descriptions, you may have a better understanding of report types and you’ll be able to recognize them for yourselves. Once you learn to recognize research by type, you may also be able to digest the material more rapidly. This is how many professional money managers are able to sift through so much information so rapidly. One-On-One Research Corp. produces Industry Overviews and Corporate Reports. For other types of reports, free broker/dealer research, or financial news services may be a better source for information. Remember, our goal is to make professional research affordable to most investors. If we aren't competitive with a broker/dealer - we'll recommend that you use their service. Follow this link for more information on the cost of producing research.

Here are some examples of a few different types of research reports:

Industry overview

Analysts often consider these reports their “piece de la resistance”. Industry overviews are an opportunity for a research analyst to really strut their financial stuff. The reports often include market trends, macro economic issues that could impact the industry, micro economic factors that could affect certain companies, corporate strategies, competitive product analysis, comparative financial analysis, risks and weakness in business strategies or management team, one or more valuation models, and detailed financial projections for anywhere from 6-15 companies….sometimes even more. These are typically long reports. They are more broad in scope than a company report. These reports often take up to 3 months to prepare and they are some of the most expensive reports to produce. It is quite easy to spend up to $100,000 or more to produce an industry overview report. Industry overviews are unpopular with some experienced investors because they take so long to produce. However, they can also be used as financial "primers" or educational reference for overall industry knowledge. Information within these reports often stays current longer because of its focus on the industry drivers as a whole. It is possible for professional investors to hang on to industry overviews for a year or longer.

Corporate report:

These reports are often issued when an analyst begins covering a particular company. This is sometimes called “initiating research” or “initiating coverage” on a company. Corporate reports cover a specific company in detail. These reports often include financial analysis of historical and projected earnings, cash flow analysis, balance sheet analysis, stock performance analysis, and trading volume analysis. In addition to these items, the reports may include an analysis of product positioning, marketing, international exposure and pricing versus the competition. The competitive environment may also discussed. Management skill and depth are reviewed. Risk factors that may impact stock performance are sometimes discussed in the report as well a “comp model” of comparative financial analysis model. The comp model lists the closest competitors to the company and their relative stock and or financial performance. Comp models are one way of establishing a price target for the stock. Other valuation models are also typically included. The focus of these reports is one individual company. These reports are medium in length and the content ages within about a quarter or two. Although the earnings models become dated within a quarter, these reports are often good reference pieces to review if one is new to a particular company.

Rating changes

These reports are often quite brief and highlight a specific change of events that may impact the performance of a company. These reports are often issued prior to a market opening, and have the potential to create volatility in the stock on a short-term basis. The information in these reports is digested by the public markets relatively quickly and thus the information becomes “built-into the stock price” within a relatively short period of time. The exception to this rule is when an "open issue" or "unresolved matter" is the reason behind the ratings change. In this case, the market will "punish the stock" until is matter is resolved.

Maintenance research

If we may be so bold to suggest it…these reports often contain relatively little new information. Maintenance research isn't titled "maintenance" so the key to determining whether or not it is indeed maintenance research is to look for an unchanged rating at the end of the report. These reports are being phased out of many research shops. Maintenance reports often provide a mini-corporate overview and an update that may or may not include areas of potential concern. For this reason they can still be perceived as valuable reports to investors. Many professional investors listen to the same earnings announcement or press conferences and come to their own conclusions regarding the information. However, professional investors sometimes monitor a group of maintenance reports - authored by several analysts - to 'take the pulse' of an industry group. These reports age more rapidly, often within a quarter.

Earnings call summaries

In essence the report is written after an earnings call, or a press conference and they can include changes or updates to earnings estimates. Incremental information released during the news conference or conference call is discussed and integrated into the pre-existing research analysis. Sometimes, this information can change an analyst’s opinion on a stock-but if this occurs the report becomes a “rating change” report. More often these reports can serve as a quick financial update on a company and a way to monitor the performance of an investment versus the projected outcome. These reports can also serve as an update on specific topics of concern to investors such as the “sales pipeline”, inventory build-up, changes in receivables. In other words, these reports are a way to closely monitor the financial performance of a company and look for flaws in management's execution of strategy. By reading a company’s earnings report and then a couple of its competitors earnings reports, it is often possible to gain perspective on overall changes in that business environment. Therefore reading these reports in industry groups can be as useful as monitoring just one company’s earnings results. These reports age within one quarter (3 months).

Research Briefs

These reports are sometimes called “morning notes” if they are released prior to the market open. The are called “intra-day calls” if they are released during active trading hours. Intra-day reports have the potential to create some volatility in intra-day trading and beyond. Research Briefs are created due to an event that the analyst feels is noteworthy to their investment thesis but may not be important enough to warrant a ratings change. In other words, these reports represent a red (or green) flag for investors. This flag might be an analysts views on news such as a pharmaceutical company gaining FDA approval for a new drug. They may also indicate the company’s failure to achieve an objective that the analyst had modeled into their projections. An example of this might be the loss of a minor customer, or a lawsuit that appears to have merit but is in its very early stages. Research briefs are normally digested within the trading day.