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Trading Comps Modeling Wall Street Prep Actual Script With 100 Percent Correct Answers

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Trading Comps Modeling Wall Street Prep Actual Script With 100 Percent Correct Answers

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TRADING COMPS MODELING WALL
STREET PREP ACTUAL SCRIPT WITH 100
PERCENT CORRECT ANSWERS

◉ Oil and gas / energy companies
Answer: EV/debt adjusted cash flow (DACF)
EV/EBITDAX (X stands for exploration expense)
EV/UFCF


◉ Real estate investment trust (REITs)
Answer: Share price / FFO per share
Share price / AFFO per share
Funds from operations = Net income + D&A + Gains on sale
Adjusted FFO = FFO - Capex + Nonrecurring items


◉ Selecting peer groups
Answer: Similar operational characteristics -
Nature of business (industry, products, markets, customers)
Industry position
Seasonality/cyclicality
Similar financial characteristics -
Size

, Leverage
Growth
Margin


◉ Resources can help determine which companies are
comparable
Answer: Primary resources -
10K competition section
Equity research
Colleagues familiar with the industry
Form 8k related to merger (within fairness opinion)
NAICS/SIC code screens
News article/SIC code screen
Clients (only when applicable)


3rd party services -
FactSet
CapIQ


◉ Process of building comps
Answer: 1. Pick comps
2. Calc multiples
3. Present results

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