SmartStockResearch.com developed a free and easy-to-use stock valuation and analysis spreadsheet, which takes a company’s financial statements and restates them in an easy-to-understand format. The spreadsheet requires Excel 2007 or better to work properly; however, there is also an OpenOffice version of the spreadsheet.
After downloading and opening the spreadsheet, there will be directions on how to analyze a new stock using the spreadsheet on the Scorecard tab. The first step is to manually download a public company’s income statement, balance sheet and cash flow statement from Morningstar.com; users will need a free Morningstar account to access this information. The statements must be downloaded from Morningstar.com because the spreadsheet relies on a consistent format.
After signing into Morningstar.com, enter a public company’s ticker symbol in the Quote box at the top of the page. When the company’s information loads, select the Financials tab, which should default to the Income Statement sub-tab. Finally, export all three financial statements into an Excel spreadsheet and copy each one into its respective sheet on the stock valuation and analysis spreadsheet.
Uploading the three financial statements should be the only data entry required; the remaining sheets automatically populate based on the information from those statements. However, users can specify certain information. For instance, in the Intrinsic Value sheet, users can adjust the input values highlighted in green in order to reflect their investment horizon, the current stock price, etc.
On the Scorecard sheet, users can also add to or change the measures used in computing the overall score, depending on what information is important to them. Selecting a cell under the Measure heading allows users to choose specific measures from a list of options, such as the five-year average return on equity. Since adding or changing measures will also change the overall score, it is important to note that this score is a product of the factors an investor deems most important.
Although the spreadsheet is quite easy to use and informative, users must take precautions, such as by ensuring the data downloaded and computed is accurate. The spreadsheet may also generate errors, which could produce a statistically inaccurate valuation. Moreover, the spreadsheet simply utilizes the three historical financial statements, which ignores everything from footnotes on the financial statements to details provided by executives in their earnings calls. Therefore, we find that the program is most useful for breaking down information on the financial statements into an easy-to-analyze format, while also utilizing charts to illustrate what the financial statements are saying about the company. The spreadsheet is a decent starting point when analyzing a stock, but it should not be the only consideration.
System Requirements: Excel 2007 or better and a free Morningstar account
Size: 115 KB