Equity Research interview preparation

Questions

100

Traced to a firm

72

Firms

45

Updated

September 2026

Asked at

All firmsMorningstar12Man Group6Balyasny Asset Management5BLBlackRock5FTFranklin Templeton5MSCI5Jefferies4CSCredit Suisse3Fidelity Investments3Moody's3Perella Weinberg Partners3Point723S&P Global3The Vanguard Group3WMWellington Management3Advent International2Apollo Global Management2Bank of America2Carlyle Group2DED.E. Shaw2Houlihan Lokey2HSBC2Piper Sandler2Sequoia Capital2SSState Street2Viking Global Investors2WBWilliam Blair2ACAQR Capital Management1BGBaupost Group1BMBNY Mellon1Centerview Partners1Coatue Management1Goldman Sachs1GSGuggenheim Securities1HWHarris Williams1Insight Partners1Invesco1Mizuho1Moelis & Company1MSMorgan Stanley1PIMCO1SCSchroders1Scotiabank1T. Rowe Price1TSTruist Securities1

Topic

All topicsResearch process9Stock pitch6Company analysis8Investment philosophy5Valuation14Modelling2Portfolio and risk8Macro8Sector knowledge2Accounting8Career and fit12Industry knowledge6Quantitative research1Sector: technology3Sector: consumer1Sector: healthcare1Sector: energy1Sector: financials2Sector: industrials1Case and estimation2

Level

AnyCoreIntermediateHard

Type

AnyTechnicalCaseFitBrainteaserMarket view

1. 057How would you set a target price?ValuationIntermediatetechnicalSell-side research

   Say this

   Apply a justified multiple to a forward earnings or cash flow estimate, usually twelve months out, and cross-check against a DCF. Then be explicit about what the multiple assumes.

   Then walk it

   1. Pick the metric that the sector actually trades on: EV/EBITDA for industrials, P/E for consumer, price to tangible book for banks, EV/revenue for early-stage software.
   2. Choose the forward year deliberately, usually the next twelve months or the following fiscal year, and say which. Comparing your target on next year's numbers to a peer multiple on trailing numbers is a common and invisible error.
   3. Justify the multiple rather than borrowing it. A premium to the peer group needs a reason: higher growth, higher returns on capital, lower cyclicality. A regression of sector multiples against growth or ROIC is the defensible way to do it.
   4. Cross-check with a DCF and with where the stock has traded historically relative to its own range and to the market.
   5. Then state the implied upside and the rating logic, and give a bull and bear case so the target has a range around it.
   6. The honesty test: if your target requires a multiple the stock has never achieved and a forecast above consensus, say so plainly. Stacking two aggressive assumptions is how targets become fiction.

   Where candidates lose it

   Applying the peer average multiple with no justification, and stacking an above-consensus forecast on top of an above-peer multiple without acknowledging that you have made two bullish calls at once.

   Expect next

   • Why that multiple rather than the peer average?
   • What is your bear case target?
   • How often would you revise it?
2. 064How would you compare two companies in the same sector trading at very different multiples?ValuationIntermediatetechnicalCSCredit SuisseGeneralist · Sydney · 2020

   Say this

   Assume the market is right until proven otherwise, then find the justification. Multiple gaps almost always reflect differences in growth, returns on capital, or risk. The investment question is whether the gap is larger than those differences warrant.

   Then walk it

   1. First decompose the gap. Is it growth, margin, returns on capital, capital intensity, cyclicality, balance sheet, or governance? Usually two or three of these explain most of it.
   2. Check the denominators are comparable. Different accounting policies, different fiscal years, different definitions of adjusted earnings, and different treatment of leases or capitalised costs all create fake gaps.
   3. Then quantify. If one grows 5 points faster with 10 points higher return on capital, how much premium does that justify? A regression of sector multiples against growth and ROIC gives a defensible expected multiple for each.
   4. The residual, the difference between the actual multiple and the regression-implied one, is the potential mispricing. That is where the idea lives.
   5. Then look for the non-fundamental explanations: index membership, liquidity, free float, ownership structure, or a governance discount for a controlled company. These are real and persistent.
   6. The conclusion should be specific: the cheaper one is cheap for reasons X and Y, which I think are permanent, or which I think the market is over-extrapolating. Either is a view.

   Where candidates lose it

   Assuming the cheaper one is the better investment. The default position should be that the market has a reason, and your job is to find it and then decide whether it is overstated.

   Expect next

   • What non-fundamental reasons could explain it?
   • Would you pair-trade them?
   • What would close the gap?

   Reported by candidates at Credit Suisse (Generalist, Sydney, 2020). Source: Wall Street Oasis.

3. 083How would you value a company with a large stake in a listed subsidiary?ValuationHardtechnicalIndian research desks

   Say this

   Sum of the parts. Value the core business on its own operating metrics, then add the market value of the listed stake, usually at a holding company discount, and subtract net debt at the parent.

   Then walk it

   1. Value the core operating business separately, using only its own earnings. This means stripping out any consolidated contribution from the subsidiary, which is the step people get wrong.
   2. Value the stake at its observable market value. That is the cleanest input in the whole exercise, so use it rather than modelling the subsidiary again.
   3. Apply a holding company discount, typically 20 to 50 percent, to reflect tax on disposal, the fact that the parent will probably never sell, and the governance discount investors apply to conglomerate structures.
   4. Subtract parent-level net debt and any other claims to get to equity value.
   5. Watch the consolidation treatment carefully. If the subsidiary is consolidated, its revenue and EBITDA are in the group numbers, so applying a group multiple double-counts the stake. Either deconsolidate or do not add the stake.
   6. This is a very common structure in India and Korea, where promoter-led holding companies own listed operating subsidiaries. The persistent discount is one of the most reliable features of those markets and also one of the most persistent value traps, because the discount rarely closes without a structural event.

   Where candidates lose it

   Double-counting by applying a group multiple to consolidated earnings and then adding the market value of the stake. That is the classic error and it is why this question gets asked.

   Expect next

   • What discount would you apply and why?
   • What would cause the discount to close?
   • How does minority interest affect your bridge?
4. 084What is minority interest and why does it appear in enterprise value?ValuationIntermediatetechnicalBulge bracket IB

   Say this

   It is the portion of a consolidated subsidiary the parent does not own. You add it to enterprise value because the consolidated EBITDA includes 100 percent of that subsidiary, so the numerator must reflect 100 percent too.

   Then walk it

   1. Accounting: if a parent owns more than 50 percent it consolidates the whole subsidiary, taking all of its revenue and EBITDA, then deducts the minority's share of profit below the line.
   2. So consolidated EBITDA overstates what belongs to the parent's shareholders.
   3. To keep the multiple consistent, you add minority interest to enterprise value. Both numerator and denominator then represent the whole enterprise, including the part owned by others.
   4. Use the market value of the minority if the subsidiary is listed. Book value is the fallback and is usually a poor estimate.
   5. The alternative approach is to deconsolidate: strip the subsidiary's EBITDA out and value the parent's stake separately. Cleaner conceptually, more work, and it is what you do when the subsidiary is very different from the core business.
   6. The error to avoid is forgetting it entirely. If you ignore minority interest, a company that consolidates a large partly-owned subsidiary will look artificially cheap on EV/EBITDA, and that appears constantly in emerging market comp sets.

   Where candidates lose it

   Knowing the rule but not the reason. The reason is consistency between numerator and denominator, and being able to state that is what shows you understand enterprise value rather than having memorised the bridge.

   Expect next

   • Should you use book or market value for it?
   • When would you deconsolidate instead?
   • How does this distort a comp set?

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.