Equity Research interview preparation
Sell side and buy side. Every question is either traced to a named firm from a public candidate report, or tagged at desk level when we could not trace it. Answers lead with the point, then the mechanism, then the limitation.
100 questions, mapped to the firms that asked them
- Questions
- 100
- Traced to a firm
- 72
- Firms
- 45
- Updated
- September 2026
009Why did you take a variant view on the multiple you applied to that company, relative to street expectations?Franklin TempletonOil and Gas · San Mateo · 2024
Say this
Because the multiple should reflect the durability and the capital intensity of the earnings, and I think the market is applying a mid-cycle multiple to earnings that are not mid-cycle. Say what the street assumes, then why that assumption is wrong.
Then walk it
- First, state the street's implied assumption in numbers. 'Consensus applies 6 times to a refiner on peak crack spreads, which implies they believe those spreads persist.'
- Then your disagreement and its basis. 'I apply 4.5 times because I think those spreads normalise within 18 months as capacity comes back, so I am valuing normalised rather than trailing earnings.'
- For a cyclical this is the whole game: the multiple and the earnings must be consistent. A low multiple on peak earnings is a value trap; a high multiple on trough earnings is often the correct entry.
- Support it with something observable: capacity additions, inventory levels, forward curve, historical spread ranges. The evidence has to be external to your own model.
- Then the discipline point: I would show the valuation across the cycle rather than a point estimate, and say what spread assumption is embedded in today's price. Reverse-engineering the market's assumption is the most persuasive thing in a research note.
Where candidates lose it
Justifying a multiple by peer comparison alone. That is circular. The multiple has to be defended by the economics, and for cyclicals specifically by where in the cycle the earnings sit.
Expect next
- What earnings are you applying that multiple to?
- How do you normalise a cyclical?
- What is priced in today?
Reported by candidates at Franklin Templeton (Oil and Gas, San Mateo, 2024). Source: Wall Street Oasis.
Firm tags come from public, anonymous candidate reports on Wall Street Oasis: strong signal, not sworn testimony. Firms are named as the places a question was reported, not as partners of Fin Maverick. Answers are written for this page to show how to think out loud; they are not scripts to recite.