Good books/courses on equity valuation modelling

Now that I have sat the December CFA Level 1 exam I am wanting to use the spare time I have to learn how to create equity valuation models on excel and start analysing stocks.

What would be a good learning resource for this?

This book looks particularly interesting:

I want to know what others think who have learned this before though and what they feel was the best learning resource for them.

these books are so expensive!

I agree. It’s cheaper buying books though than these Wall St Prep/Breaking Into Wall St packages.

And I feel it’s definitely worth the investment (both in terms of time and money) if it helps improve my analysis skills.

I was wondering how the L2 CFA material compares to these kind of books you mentioned…to anyone having experience of both, how much of the material foud in these valuation books are actually covered by the L2 CFa curriculum??

“Breaking into Wall Street” --> financial modeling packages

Valuation by Koller/McKinsey --> valuation

“The Practitioner’s Guide to Investment Banking” --> my favorite book on valuation and industry best practices from the standpoint of a practitioner, as the title suggests

I was looking into this a couple months ago while procrastinating on studying… I was mostly interested in learning VBA side by side with modeling, but sounds like thats what you want too

Chandan Sengupta “Financial Analysis and Modeling Using Excel and VBA” - I bought this one but haven’t had a chance to use it yet as I was busy studying for L1. It’s not really about valuations at all, theres a chapter on option pricing and portfolios and some stuff about simulating stock prices or whatever. It’s definately more about learning VBA in a financial environment, which is what I bought it for.

The other book I was considering was Simon Benninga’s “Financial Modeling”, as it’s got some pretty good reviews on Amazon. I haven’t bought it so haven’t thumbed through it at all, but its one to look into.

Damodaran on Valuation is a good book to study from… If you can read pdf’s from his website too… in fact you can go through the entire site… theres a lot that you can learn from there

I actually have a copy of this book. I am yet to read it though. I want to be able to create models in Excel, not just learn about the concepts. If I am not mistaken this book just covers the concepts though. Am I right?

Sign up for Breaking into Wall Street if you’re serious about learning how to build models the Wall Street way

I’m not so interested in the LBO models etc. I don’t stand a chance of getting any interviews within Investment Banking, nor am I really interested in working in one anyway.

It’s the asset management valuation models I am interested in. Does BIWS include these?

ya you are right, the book only covers the concepts.

What i would suggest is that you could take up any company and try to build a model yourself refering to some of the books or forums like this when you get stuck. You can have a look at some of the sample models which would be there on the internet so that you would know what the basic structure is like.

There is a lot of material on the web and you would learn a decent amount this way.

What is asset management model? I’ve never heard of such a thing.

Other books to consider are “Best Practices for Equity Research Analysts” (Valentine), or even just the Financial Times Guide to Corporate Valuation. The second is pretty short, about 200 pages, and having thumbed through it in the store I think it’d probably be a good starting point. Plus you can read it in a day or two if you go hard

The best practices one I also just thumbed through, and it looks more like just what the title says - best practices - so it basically distinguishes good habits from the bad. Won’t teach you how to model, but would be a good read when you’re still building habits.

While we’re on the topic does anybody know of any good commodities/NAV introductions? I know most of the prep providers have courses on it, but I’m looking for a good book at this point. Particularly on valuing upstream oil & services. Also, how about valuing private companies when data is less available?

I was referring to models used in asset management instead of those used in investment banking.

Yeah that sounds like a good idea. Might look into this more


I have seen the Best Practices book on Amazon before. As you say though, it is just best practices.

I will take a look at this other book you have mentioned though.Might be useful

I think it’s great to want to learn stuff, but personally don’t see how this can be learned from books? I’ve learned from over a decade building models in real life. Everyone I know who is good learned the same way. Not saying it’s not possible, just saying finding some real world work is probably the best education.

Yeah, Breaking into Wall Street has a bunch of operating models too, not just deal models. Of course, LBO and M&A models build off of operating models (i.e. standard three-statements, fully integrated). Look at the site and figure it out for yourself.

As others have mentioned, you need to learn by doing, not just by reading out of a book. That would be akin to watching some piano videos of Horowitz, Argerich, Rubinstein, and so forth on YouTube and then decide that you’re ready to become a concert pianist in two weeks. It makes no sense.

I asked someone the other day, “Do you know how to get to Carnegie Hall?” His response: “Practice.”

If you are into the quant side of investing I have always been a fan of this:

But I have owned this for going on ten years now. Worked for a lot of smart people (Phd Astrophysics, etc) who reference this.

A few random thoughts here, maybe no real point, just rambling. But I’ve seen some horrible models (most of them are). This is an opportunity if you’re a geek like me; to 1) do it better, and/or 2) rip appart the logic in the useless model. It’s also a “hard skill”, meaning something tangible you can do.

This year we’ve been working on a multi-billion dollar deal with a huge name investor (can’t name em obviously), party A invests $xBB with party B, gets paid back when? Parties A and B both have tons of imbedded options. Endless scnarios. A new rapidly evolving and strange market. The weirdest deal I’ve ever modeled.

Anyhow I got ahold of the model from the analyst on party A side. It was as if the person never worked in finance. Shock. There was some really odd stuff in that model. And I bet the guy went to a top school and was getting paid big bucks to churn out that crap too. [facepalm]

So yeah, learn to model, it can be handy.