Securities are analysed and recommendations made based on the macroeconomic environment, the various sectors in which companies operate and company-specific factors. Analysts employ two main types of criteria: 1) Qualitative ones such as sector outlook, quality of management, growth strategy (internal, external etc.) and market positioning (e.g. innovation). 2) Quantitative ones such as growth momentum, ability to generate free cash flow, cost control, financial health and overall profitability, which yield a series of financial ratios that are analysed for each company and compared with those of the company's peer group. The importance of individual criteria can vary from sector to sector. |
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