AI Stock Analysis Prompts

Build a 10-year DCF model for [TICKER]. Use these assumptions:
- Revenue growth: [X]% declining to [Y]% by year 10
- FCF margin: [X]% expanding to [Y]%
- Discount rate (WACC): [X]%
- Terminal growth rate: [X]%

Output a table with each year's revenue, FCF, and discounted FCF. Calculate the implied share price and compare it to the current market price of $[X]. State whether the stock appears undervalued, fairly valued, or overvalued and by what margin.

Calculate the Graham Number for [TICKER] using the formula: sqrt(22.5 × EPS × Book Value Per Share).

Use trailing twelve month EPS of $[X] and book value per share of $[X]. Compare the result to the current share price of $[X]. Also calculate the margin of safety percentage.

Then evaluate: does this stock meet Graham's other criteria? Check PE < 15, P/B < 1.5, current ratio > 2, positive earnings for last 5 years, and dividend history.

Create a comparable company analysis for [TICKER]. Include these 5 peers: [PEER1], [PEER2], [PEER3], [PEER4], [PEER5].

Build a comparison table with these columns for each company:
- Market Cap, EV, Revenue (TTM), EBITDA (TTM)
- EV/Revenue, EV/EBITDA, PE ratio, PEG ratio
- Revenue growth (YoY), EBITDA margin, Net margin

Calculate the peer group median for each multiple. Apply the median multiples to [TICKER]'s financials to derive an implied valuation range. Highlight where [TICKER] trades at a premium or discount to peers and explain why.

Run a reverse DCF analysis for [TICKER] at the current price of $[X].

Given:
- Current FCF: $[X]M
- WACC: [X]%
- Terminal growth rate: [X]%

Calculate the implied revenue growth rate the market is pricing in over the next 10 years. Then compare that implied growth rate to:
1. The company's historical 3-year and 5-year revenue CAGR
2. Analyst consensus estimates
3. Industry growth rates

State whether the implied growth rate is realistic, conservative, or overly optimistic.

Perform a sum-of-the-parts (SOTP) valuation for [TICKER].

Break the business into its operating segments. For each segment, provide:
- Segment revenue and operating income (most recent fiscal year)
- An appropriate valuation multiple (EV/Revenue or EV/EBITDA) based on pure-play comparables
- The implied segment value

Sum the segment values, subtract net debt, and divide by diluted shares outstanding to get an implied per-share value. Compare to the current market price and quantify the conglomerate discount or premium.

Analyze [TICKER]'s most recent 10-K filing for earnings quality red flags. Check each of these:

1. Revenue growing faster than cash from operations (divergence signal)
2. Days sales outstanding (DSO) increasing faster than revenue
3. Inventory growing faster than COGS
4. Capitalized expenses as % of total spending (rising = aggressive)
5. Deferred revenue declining while reported revenue grows
6. Frequent one-time items or non-GAAP adjustments
7. Goodwill/intangibles as % of total assets (impairment risk)
8. Change in accounting policies or auditor

For each item, state PASS or FLAG with a one-line explanation. Give an overall earnings quality score from 1-10.

Calculate the accrual ratio for [TICKER] using the balance sheet approach and the cash flow approach.

Balance Sheet Accruals = (Net Operating Assets end - Net Operating Assets begin) / Average Total Assets
Cash Flow Accruals = (Net Income - CFO - CFI) / Average Total Assets

Use the last 3 years of data. Show the trend. Compare to the industry median.

High positive accruals (above +10%) suggest earnings are being inflated by non-cash items. Explain what is driving the accruals and whether this is a concern.

Review [TICKER]'s revenue recognition policies from their most recent 10-K. Answer these questions:

1. What is the primary revenue recognition method? (Point-in-time vs over-time)
2. What % of revenue is recurring vs one-time?
3. Are there channel stuffing risks? (Analyze quarterly revenue seasonality patterns)
4. How large is the deferred revenue balance, and is it growing?
5. Are there significant contract modifications or variable consideration estimates?
6. What is the accounts receivable turnover trend (3 years)?
7. Has the company restated revenue in the last 5 years?

Rate the revenue recognition as Conservative, Moderate, or Aggressive with justification.

Analyze cash conversion quality for [TICKER] over the last 5 fiscal years.

Calculate these metrics for each year:
- FCF / Net Income (should be >80%)
- CFO / EBITDA (operating cash conversion)
- CapEx / Revenue (investment intensity)
- Working capital changes as % of revenue
- Stock-based compensation as % of net income

Build a table showing the trend. Flag any year where FCF / Net Income drops below 70% and explain what caused the divergence. Is this company a cash machine or an earnings mirage?

Calculate the Beneish M-Score for [TICKER] using the 8-variable model:

1. DSRI (Days Sales in Receivables Index)
2. GMI (Gross Margin Index)
3. AQI (Asset Quality Index)
4. SGI (Sales Growth Index)
5. DEPI (Depreciation Index)
6. SGAI (SGA Expense Index)
7. LVGI (Leverage Index)
8. TATA (Total Accruals to Total Assets)

M-Score = -4.84 + 0.920×DSRI + 0.528×GMI + 0.404×AQI + 0.892×SGI + 0.115×DEPI - 0.172×SGAI + 4.679×TATA - 0.327×LVGI

An M-Score above -1.78 suggests potential manipulation. Show your calculation for each variable and the final score. Compare to the threshold and state the probability assessment.

I'm reading [TICKER]'s most recent 10-K filing. Analyze it and provide a structured summary covering:

1. **Business Model**: How does the company make money? Top 3 revenue streams by size.
2. **Risk Factors**: What are the 3 most material risk factors (not boilerplate)?
3. **Management Discussion**: What did management highlight as key achievements and challenges?
4. **Revenue Segments**: Break down revenue by segment and geography. Which segments are growing fastest?
5. **Key Metrics**: Extract any non-GAAP metrics management emphasizes and explain why they use them.
6. **Red Flags**: Any unusual disclosures, related-party transactions, or accounting changes?
7. **Capital Allocation**: How is the company deploying cash? (buybacks, dividends, M&A, capex)

Keep each section to 2-3 sentences maximum.

Perform a balance sheet health check for [TICKER] using the most recent quarter.

Analyze:
- Current ratio and quick ratio (liquidity)
- Debt-to-equity and net debt-to-EBITDA (leverage)
- Interest coverage ratio (debt service ability)
- Goodwill + intangibles as % of total assets (impairment risk)
- Cash and short-term investments vs total debt (net cash position)
- Debt maturity schedule: how much debt matures in the next 3 years?
- Off-balance-sheet items: operating leases, pension obligations

Rate the balance sheet as: Fortress (very strong), Healthy, Adequate, Stretched, or Distressed. Explain your rating.

Analyze [TICKER]'s cash flow statement for the last 4 quarters. For each quarter, show:

Operating Cash Flow:
- Net income to CFO bridge (major adjustments)
- Working capital impact

Investing Cash Flow:
- CapEx (maintenance vs growth, if disclosed)
- Acquisitions
- Other investing activities

Financing Cash Flow:
- Debt raised vs repaid
- Share buybacks
- Dividends paid

Calculate free cash flow (CFO - CapEx) for each quarter and the trailing twelve months. Is FCF growing, stable, or deteriorating? What is the biggest use of cash?

Build a debt maturity schedule for [TICKER] based on the most recent 10-K or 10-Q notes on long-term debt.

Create a table showing:
- Year of maturity (next 5 years + thereafter)
- Amount maturing each year
- Interest rate (fixed vs floating)
- Type (senior notes, revolving credit, term loan, convertible)

Then analyze:
1. What % of total debt matures in the next 2 years? (>30% = refinancing risk)
2. What is the weighted average interest rate? How does it compare to current rates?
3. Does the company have enough cash + FCF to cover near-term maturities without refinancing?
4. Are there any covenant restrictions worth noting?

Analyze the working capital efficiency for [TICKER] over the last 3 fiscal years.

Calculate for each year:
- Days Sales Outstanding (DSO) = (Receivables / Revenue) × 365
- Days Inventory Outstanding (DIO) = (Inventory / COGS) × 365
- Days Payable Outstanding (DPO) = (Payables / COGS) × 365
- Cash Conversion Cycle (CCC) = DSO + DIO - DPO
- Net Working Capital as % of Revenue

Show the trend in a table. A rising CCC means the company is tying up more cash in operations. Compare to 2 industry peers. Explain what's driving any changes and whether management is improving or losing efficiency.

Assess the economic moat for [TICKER] using Morningstar's moat framework. Evaluate each source:

1. **Network Effects**: Does the product become more valuable as more people use it? Evidence?
2. **Switching Costs**: How painful is it for customers to leave? Quantify if possible.
3. **Cost Advantages**: Does the company have structural cost advantages? (scale, geography, process)
4. **Intangible Assets**: Brands, patents, regulatory licenses that competitors can't replicate.
5. **Efficient Scale**: Does the company serve a market that only supports 1-2 profitable players?

For each source, rate as: Strong, Moderate, Weak, or None.

Overall moat rating: Wide, Narrow, or None. Is the moat widening, stable, or eroding? What is the single biggest threat to the moat?

Analyze the market share position for [TICKER] in its primary market: [MARKET NAME].

Estimate:
- Total addressable market (TAM) size and growth rate
- [TICKER]'s estimated market share (current and 3 years ago)
- Top 5 competitors by market share with their approximate shares
- Market concentration (HHI or CR4)

Answer:
1. Is [TICKER] gaining or losing share? At what rate?
2. Is the overall market growing faster than the company? (share loss despite revenue growth)
3. What is the company's competitive response to share threats?
4. Is this a winner-take-most market or a fragmented one?

Evaluate the pricing power of [TICKER]. Analyze:

1. **Gross margin trend** (last 5 years): Expanding margins during inflation = pricing power
2. **Revenue per unit/user trend**: Is the company raising prices or just adding volume?
3. **Customer concentration**: Does any single customer represent >10% of revenue?
4. **Switching costs**: How easy is it for customers to find substitutes?
5. **Brand premium**: Does the company charge more than competitors for similar products?
6. **Contract structure**: Long-term contracts with escalators? Or spot pricing?

Compare gross margin stability to 2 direct competitors during the 2022-2023 inflation period. Rate pricing power as: Strong, Moderate, or Weak with a one-paragraph justification.

Create a competitive positioning analysis for [TICKER] vs its top 4 competitors.

Build a comparison matrix scoring each company 1-10 on:
- Product quality / differentiation
- Price competitiveness
- Distribution / scale advantage
- Brand strength
- Technology / innovation
- Customer satisfaction (use NPS or review data if available)
- Financial strength (balance sheet + FCF)

Identify [TICKER]'s key differentiators and vulnerabilities. What would it take for a competitor to displace [TICKER] in its strongest segment? What is [TICKER]'s most vulnerable segment?

Apply Porter's Five Forces framework to [TICKER]'s primary industry.

Rate each force as High, Medium, or Low with 2-3 sentences of evidence:

1. **Threat of New Entrants**: Capital requirements, regulatory barriers, brand loyalty
2. **Bargaining Power of Suppliers**: Supplier concentration, switching costs, input scarcity
3. **Bargaining Power of Buyers**: Buyer concentration, price sensitivity, information availability
4. **Threat of Substitutes**: Alternative products/services, price-performance of substitutes
5. **Competitive Rivalry**: Number of competitors, industry growth rate, exit barriers

Overall industry attractiveness: High, Medium, or Low. Is [TICKER] positioned on the right side of these forces? What force poses the biggest risk to profitability?

Build a bull case, base case, and bear case for [TICKER].

For each scenario, provide:
- Key assumptions (revenue growth, margins, multiple)
- 3-year price target with the math shown
- Probability weight (must sum to 100%)
- The single most important catalyst or risk that defines this scenario

Bull case should be realistic upside, not fantasy. Bear case should be plausible downside, not apocalypse.

Calculate the probability-weighted expected value. Compare to current price of $[X]. What is the expected return and is the risk/reward skew favorable?

Build a risk matrix for an investment in [TICKER].

Identify 8-10 specific risks across these categories:
- Business risks (competition, customer concentration, key person)
- Financial risks (leverage, liquidity, currency)
- Regulatory/legal risks
- Macro risks (recession, interest rates, geopolitical)
- Execution risks (integration, product launches, scaling)

For each risk:
- Likelihood: Low / Medium / High
- Impact if realized: Low / Medium / High
- Mitigation: What is the company doing about it?

Create a 2x2 matrix (likelihood vs impact). Which risks fall in the high-likelihood, high-impact quadrant? These are the thesis-killers — how would you monitor for early warning signs?

Build a catalyst timeline for [TICKER] covering the next 12 months.

For each potential catalyst, provide:
- Expected date or timeframe
- Description of the event
- Direction: Positive / Negative / Uncertain
- Magnitude estimate: Minor (<5% move), Moderate (5-15%), or Major (>15%)
- Probability of occurring

Include:
- Earnings dates (next 4 quarters)
- Product launches or FDA approvals
- Contract renewals or expirations
- Debt maturities or refinancing
- Regulatory decisions
- Management changes or insider activity patterns
- Macro events that specifically affect this company

Rank the top 3 catalysts by expected impact (magnitude × probability).

Help me determine the right position size for [TICKER] in my portfolio.

Given:
- Portfolio size: $[X]
- Risk tolerance: [Conservative / Moderate / Aggressive]
- Conviction level: [Low / Medium / High]
- Current price: $[X]
- Stop-loss level: $[X] (or max acceptable loss: [X]%)

Calculate:
1. Kelly Criterion position size (if you can estimate win probability and payoff ratio)
2. Volatility-based sizing (using the stock's 30-day and 90-day average true range)
3. Risk-based sizing: if this position hits your stop-loss, what % of portfolio is lost?
4. Correlation check: does this overlap with existing holdings in [SECTOR]?

Recommend a position size as % of portfolio with your reasoning. Maximum single position should not exceed [X]% of total portfolio.

Write a concise investment memo for [TICKER] in the style of a hedge fund analyst. Structure:

**Company Overview** (2 sentences): What the company does and why it matters now.

**Thesis** (3-4 sentences): The core reason to own this stock. What does the market misunderstand?

**Key Metrics**: Table with — Market Cap, EV, Revenue (TTM), EBITDA margin, FCF yield, PE, EV/EBITDA, Net debt/EBITDA, ROIC, Revenue growth (3yr CAGR)

**Catalysts** (3 bullets): Near-term events that could unlock value

**Risks** (3 bullets): What could go wrong

**Valuation**: Fair value estimate using 2 methods. Current price vs target and implied upside/downside.

**Verdict**: Buy / Hold / Pass with a one-sentence summary. Include suggested entry price and position size (% of portfolio).