Equity Analyst Job Description

Equity analysts crunch numbers to evaluate stocks.

Equity analysts, also known as stock analysts, use financial expertise to analyze companies traded on domestic and global stock exchanges. Analysts work at brokerage firms, charitable endowments, institutional investment companies, financial research firms, financial publications and mutual funds. Analysts specialize in industries, sectors or countries. Attention to detail, critical thinking and financial analysis skills are essential qualities for this profession.

Duties

Equity analysts research a variety of American and foreign companies.

Equity analysts review and interpret balance sheets, cash flow statements, and income statements on publicly traded American and foreign companies. He calculates financial ratios and performs exchange rate computations.

Equity analysts make buy, sell or hold suggestions.He visits corporate headquarters, speaks with employees and communicates with customers. He reads industry journals, magazines, newspapers and online sources to follow targeted companies and economic trends.

Education

Formal education is integral for equity analysts.

Equity analysts must possess a bachelor's degree with concentrations in economics, financial management, international finance or mathematics. Master's degrees in business administration, or MBAs, or financial management are beneficial.

Aspiring equity analysts should take courses in economics, financial management, financial statement analysis, international finance, money and banking, statistics and technical writing.

Certification/Licenses

The CFA credential requires rigorous preparation.

The CFA Institute offers the chartered financial analyst, or CFA, credential. Candidates must pass three examinations called "Levels." According to the CFA Institute website, CFA candidates dedicate approximately 300 hours of study for each level.

CFA examinations cover 10 topics known as the Candidate Body of Knowledge, or CBOK: Ethical and professional standards, quantitative methods, economics, financial reporting and analysis, corporate finance, equity investments, fixed income, derivatives, alternative investments and portfolio management and wealth planning.

According to the Financial Industry Regulatory Authority, equity analysts must pass the Research Analyst Examination Series 86/87 tests. The Series 86 examination tests knowledge of fundamental analysis and valuation of equity securities. The Series 87 examination covers federal and securities industry rules and regulations.

Key Traits

Equity analysts must make accurate recommendations.

Successful equity analysts must have excellent research and financial analysis skills. Diverse business and global economic knowledge is integral. Presentation and writing abilities are essential to support recommendations to clients and upper management.

Equity analysts need to make comprehensive evaluations about publicly traded companies. She must handle significant pressure to make correct judgments for internal company management and external clients.

Anticipated Salaries

The mean yearly salary for an equityt analyst was $84,780 in 2008.

According to the U.S. Bureau of Labor Statistics, or BLS, financial analysts earned a mean hourly wage of $40.76 and a mean annual salary of $84,780, as of May 2008. Financial analysts earned annual salaries ranging from $43,440, for the lowest 10 percent, to $141,070, for the highest 10 percent. Equity analysts usually receive annual bonuses in addition to their salaries.

Prospects

The future is bright for financial analysts.

According to a 2008 projection made by the BLS, job growth of 20 percent is anticipated for financial analysts between 2008 and 2018. This figure is faster-than-average compared with other occupations. The increase in global equity markets and the need to analyze domestic publicly traded companies contribute to the positive growth scenario for financial analysts with advanced degrees and certifications, according to the BLS.

Expert Insight

Warren Buffett is an equity evaluation expert.

Warren Buffett is a legendary stock analyst and founder of Berkshire Hathaway. In the "Tao of Warren Buffett," he gave the following advice about picking stocks: "If Calculus or Algebra were required to be a great investor, I'd have to go back to delivering newspapers."

References

• U.S. Bureau of Labor Statistics Occupational Outlook Handbook, 2010 - 2011 Edition: Financial Analysts
• CFA Institute: CFA Program Course of Study
• CFA Institute: CFA Program Topical Outline
• Financial Industry Regulatory Authority: Qualifications FAQ - Research Analysts
• U.S. Bureau of Labor Statistics Occupational Employment and Wages, May 2008: Financial Analysts

Resources

• American Chronicle; "The Tao of Warren Buffett: A Book Review"; Sept. 25, 2008