Stock Pitch Tutorial by Adam Hanford

1. A D A M H A N F O R D
Stock Pitch Tutorial

2. Main Points
 Company Description
 Investment Thesis
 Estimate
 Valuation
 Risks

3. General Questions about the Company
 Market Position
 Market Growth
 Market Share Trends
 Business Cycle Risk
 FCF
 ROCE
 Market Stability

4. Investment Thesis
 What will drive growth in this company?
 Why is the market undervaluing the company?

5. Free Cash Flow and Return on Capital Employed
 “Real” Cash Flow
 FCF = EBITDA – Interest Expense – Income Tax –
Change in Net Operating Working Capital +
Deferred Taxes + Adjustments
 NOWC = A/R + Inventory – A/P
 Return on Capital Employed
 ROCE = EBIT / (Total Assets – Intangible Assets –
Current Debt – Cash)
 Use Investopedia or Wikipedia!!!

6. Estimates
 Need to predict revenue and EBITDA going forward
 Revenue:
 Use five year average
 Management Guidance
 Use Comparables
 Capital IQ or Bloomberg
 Earnings
 Use five year average
 EBITDA or Expense Margins
 Management Guidance
 Use Comparables

7. Valuation
 EV/EBITDA
 Need to predict EV/EBITDA Multiple
 Five year average
 Comparables
 EV = Market Capitalization + Net Debt
 EBITDA * EV/EBITDA – Net Debt = Market Cap.
 Market Cap. / Outstanding Shares = Price

8. Risks
 Outline general risks to your thesis
 Eg. A Fed rate increase will raise interest rates
leading to a much higher level of interest rate
expense

9. Suggestions for Pitch
 Larger Companies
 Straightforward
 One line of business versus several
 Looking for about 10% return over a year