How to research a stock

1. Explain how the company earns money

Before looking at a price target, describe the company in plain language. What does it sell, who pays, and what makes customers stay? Identify its major products, customers and operating regions. Write down which statements you have verified and which are still assumptions.

A practical starting question is: “What would have to happen for this business to earn less next year?” It directs your reading toward dependencies, competitors and costs instead of only the most optimistic story.

2. Start with the original filings

For US domestic public companies, the annual 10-K includes audited financial statements, business discussion and material risks. The quarterly 10-Q supplies unaudited interim statements and updates. A current report on Form 8-K can disclose significant events between those reports. Foreign issuers can use different forms.

Use the company’s investor-relations site and the SEC’s free EDGAR database. Confirm the company identity, reporting period and whether an amendment exists. A filing’s publication date and the period covered are different things. Investor.gov explains the filing types and how to find them.

3. Compare like with like

Read revenue, profit, cash flow and the balance sheet together. Check currency, units, fiscal periods and whether a number is reported or estimated. Annual revenue and quarterly revenue are not interchangeable; neither are total net income and earnings per share.

Consider this invented example: a company’s revenue rises from 100 to 120 million while net income falls from 10 to 6 million. Revenue grew 20%, but net margin fell from 10% to 5%. The next research question is why costs rose faster than sales—not whether revenue growth alone makes the stock attractive.

Look in the notes and management discussion for the explanation. An acquisition, one-time charge or changed accounting presentation can affect comparisons. Record the relevant source passage rather than guessing from a chart.

4. Separate business quality from price

A description of a successful company does not establish what its shares are worth. Record which earnings period a valuation ratio uses and whether its inputs are historical or forecast. When comparing companies, note differences in their business models and accounting before interpreting a multiple.

Keep analyst targets in a separate “opinions and estimates” column. Ask what assumptions support the view and when it was published. An AI summary can help organize questions, but verify important figures and interpretations against the underlying source.

5. Keep a short research note

Copy this worksheet into your notes and fill it with dated evidence. “Unknown” is a useful answer when you have not found support.

Business

What is sold, to whom, and why do customers choose it?

Evidence

Which filing, date, period and page support the key figures?

Expectations

Which assumptions are yours, management’s or an analyst’s?

Risks

What could weaken demand, margins, cash generation or financing?

Change of view

Which observable result would contradict your current explanation?

Next review

What upcoming report or unresolved question deserves a follow-up?

This is a research process, not a buy-or-sell rule. It does not establish whether a stock is suitable for your circumstances.

Put the checklist into practice

TradinZ Stock Research brings available company context, financial signals and analyst views together. The free NVIDIA example lets you explore selected research without a card. Coverage and observation dates vary; return to original filings when a figure matters.

Once you understand an individual business, ask how it fits with the rest of a portfolio. Continue with how to spot portfolio concentration risk.