How do I research a share?

The rundown

  • When researching stocks, understand the company’s business model - what it does, how it makes money and the industry it operates in.
  • Use annual reports to find insights on a company’s outlook, profits and losses, cash flow, and the risks that could impact the company’s future performance.
  • Investors should keep an eye on a company’s financial trends over time to determine a company’s revenue, performance, and risk factors.

Buying a share means owning part of a company. Whether it’s a household name like Woolworths Group or a global brand like Disney, understanding the business behind the ticker symbol helps you make informed decisions.

 

Step 1: Know the business

Familiarise yourself with the basics:

  • What does the company do?
  • How much money does it make?
  • What industry is the company in?

For example, Woolworths Group operates supermarkets, liquor stores, and retail services across Australia and New Zealand. Disney earns revenue from theme parks, movies, streaming (Disney+), and merchandise.

 

Step 2: Find the annual report

A company’s annual report is a goldmine of information and can provide investors with:

  • CEO's message: Strategic goals and reflections of the company.
  • Financial statements: The company’s profits and losses, balance sheet and cash flow.
  • Risks and outlook: What could impact the company’s future performance.

You can find these reports on the company’s website under ‘Investor Centre’ or via the ASX for Australian companies.

 

Step 3: Understand key financial metrics

Here are some common metrics and what they mean for investors:

Metric

What it tells us

Example

Revenue

Total income

Disney’s FY24 revenue was reported at over $89 billion USD

Net profit

Earnings after expenses such as tax and other overhead costs

Woolworths reported a net profit of $1.62 billion in FY24

Earnings per share (EPS)

Profit per share

Higher EPS can indicate stronger profitability for investors

Dividend yield

Income investors could make from dividends

Woolworths’ yield is around 3% (as of mid 2025)

Debt-to-equity

A company's financial leverage ratio

Lower ratios suggest that a company may be less reliant on debt

Step 4: Use trusted sources of information

Investors should always opt to research stocks and companies using trusted sources of information, including:

  • ASX: Company announcements and reports.
  • Morningstar: Independent analysis and ratings.
  • Company websites: Annual and interim reporting.
  • Investor presentations: An alternative to reading financial reports.

 

Step 5: Look at trends over time

Relying solely on one years’ worth of company data could provide an investor with skewed results. Always ask:

  • Is revenue growing steadily?
  • Are profits consistent or volatile?
  • Is debt increasing or decreasing?

For example, Amazon has shown strong revenue growth over the past decade, but its profit margins fluctuate due to heavy reinvestment in logistics and technology.

 

Step 6: Understand the risks

Every company faces risks, including economic downturns, regulatory changes, technological disruption and currency fluctuations, especially for global companies. Investors can find these risks listed in the ‘Risk Factors’ section of a company’s annual report.
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The Academy is intended to provide general information of an educational nature only. Any securities or prices used in the examples given are for illustrative purposes only and should not be considered as a recommendation to buy, sell or hold. Past performance is not indicative of future performance. Investing carries risk. 

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