When you are starting an investment journey and, in plan, to do your research, you need to follow certain steps and read some documents, mainly Annual Reports, Concall, and then Research Reports.
A research report is a detailed document that provides an in-depth analysis of a company, industry, or financial market. It is typically prepared by analysts, investment firms, or brokerage houses to help investors make informed decisions.
A research report acts as a guide for investors, helping them understand a stock’s potential before making investment decisions. However, it’s essential to use it as a tool, not a rule, since market conditions and biases can impact the conclusions drawn.
Some people invest by solely considering the research reports and there are a set of people who don’t consider reports only.
But there is a unique set of people who read all the documents namely annual reports, concall reports, and also research reports.
But What you should do and why is it important to read research reports after Annual Reports?
Before diving into a research report, it’s crucial to first read the company’s annual report and earnings call transcripts. Research reports are written by analysts who may have their own biases and reading them first can unknowingly shape your perspective before you fully understand the company.
This can lead to pre-set assumptions and prevent you from forming an independent viewpoint. By starting with the annual report, you get a firsthand, unbiased look at the company’s financials, strategy, and future.
Earnings calls further provide insights into management’s confidence and approach. Once you’ve built your understanding, you can then refer to research reports as a secondary tool to compare insights rather than letting them dictate your opinion. This approach ensures a more well-rounded and objective investment analysis.
But Research Reports have advantages and carry limitations as well, so let’s dive into both aspects.
Why do Research Reports Matter?
A well-crafted research report is like a roadmap for investors. It provides:
In-depth company analysis: Financials, management quality, business model, competitive positioning.
When you are researching a company you need to understand several factors like, business, financials, management quality, business model, and also the competitive positioning of the business.
You will get an insight into all the above parameters when you are going through a research report.
Industry outlook: In the Research report, there is a section where you will find insights about the Industry and also, what are the headwinds and tailwinds of that industry we will understand in the report.
We will also find the interconnection between the Macro and Microtrends in the reports.
Valuation insights: Analysts will conduct the valuation of a particular stock and they will do the fundamental analysis, so when you are going through the research report we will find the actual value or the intrinsic value of a stock and we will understand whether it is overvalued, undervalued or fairly priced.
Risk assessment The reports will tell us what are the Key risks that could impact the company’s future performance.
Actionable recommendations This is the favorite sweet part of many people, where they can find the actual recommendation of Buy, sell, or hold calls based on thorough analysis.
For both retail and institutional investors, these reports serve as a foundation for making informed investment decisions rather than acting on gut feelings or market noise.
But everything has its own Pros and Cons, so let’s look into the other side of the research reports as well.
While research reports are powerful tools, they are not foolproof—and blindly trusting them can lead to costly mistakes. Here’s why:
Bias & Conflicts of Interest: Some reports may be influenced by investment banks or brokers pushing a particular narrative.
So, when you buy stock based on the report you are investing based on their biases. Biases alone won’t make it good or bad.
Market Conditions Change: Reports are based on past data and assumptions, which can become outdated quickly.
Too Much Data, and Too Little Context Reports can be overwhelming, and without proper understanding, investors might misinterpret key findings.
To eliminate biases and ensure a comprehensive, data-driven approach, Savart is soon launching research reports that provide a detailed, objective analysis of companies. These reports will not only track all historical and available data but will also feature the Savart Score, offering a clear, concise, and well-structured evaluation of a company’s potential.
With all key insights in one place, investors can make informed decisions without being swayed by selective narratives. Stay tuned for a new era of unbiased, research-backed investing with Savart!