Putting Together a Public Information Book (PIB)
Where to find the data you need to build a financial model
Before firing up Excel to begin building a 3-statement model or a variety of , analysts need to gather the relevant reports and disclosures that will be critical for model accuracy. Collecting these documents is such a common part of an investment banker's daily workflow that the end result has a name: the public information book (or PIB).
The PIB used to be a massive physical spiral bound packet distributed by the analyst to the entire deal team, but is now distributed mercifully as a soft-copy pdf.
What's in a public information book (PIB)
At a minimum, an analyst will need to gather the following documents to get a historical picture of the company's performance:
|Historical financial results||Best place to find data|
Other documents often included in the public information book (PIB) include equity research reports as well as models and transcripts of management conference calls that can help the analyst make projections and gain company and industry insights:
|Estimates, research and company insight||Best place to find data|
In addition, a public information book (PIB) will contain a “news run” — a complication of relevant news on the company in the last 6 months (i.e. stock splits, acquisitions, partnerships, changes to ownership and key personnel). Curated company news is made available by all the major.
Annual and quarterly (or interim) filings
When analyzing public companies in the United States, finding annual (10K) and quarterly (10Q) filings is a fairly straightforward process. Public companies file reports with the Securities and Exchange Commission (SEC) and those reports become available to the public on www.sec.gov through a searchable database system called EDGAR:
Outside the United States, the availability of filings to the public and filing requirements vary. We go more in depth about this here: Accessing SEC Filings, Company Reports and Financial Data in the United States and Elsewhere.
Quarterly press releases
In addition to required SEC filings, virtually all public companies issue a quarterly press release. These press releases can be found in the investor relations section of most companies’ websites. They are also filed as a Form 8-K with the SEC and can be found on EDGAR.
Press releases usually contain the financial statements that will ultimately go into the 10K and 10Q. The reasons most analysts carefully examine these press releases are:
Press releases are more timely
They often precede the corresponding 10Q or 10K by a few days or weeks, giving analysts more timely data.
“Earnings season” refers to when earnings releases are announced via a press release, not when the 10Q or 10K are filed.
Press releases contain management guidance
Companies will often provide guidance for things like next year's expected EPS, revenue growth, capital expenditures and operating margins. The range of disclosure is wide — some companies provide no guidance while others provide a ton of detail. Here is Apple’s guidance from their 2016 Q3 press release:
Press releases contain Non-GAAP disclosures
Press releases contain Non-GAAP disclosures like EBITDA, Non-GAAP operating profit, and Non-GAAP EPS. These are useful for analysts when trying to bridge accrual-based accounting profits with a more “normalized” assessment of a company’s performance.
Below is American Electric Power’s third-quarter 2016 press release reconciling GAAP Net Income (which you’ll find in the 10Q) and the company’s “adjusted EBITDA” figure that they want everyone to look at instead.
Management conference call transcripts
The same day a company issues its quarterly press release, it will also hold a conference call. On the call, analysts often learn details around management guidance. These conference calls are transcribed by several service providers and can be accessed by subscribers of the large .
Equity research reports
Through filings and press releases, companies provide historical information that serves as an important foundation from which forecasts are made. However, since the ultimate goal of building a 3-statement financial model is making forecasts, there are several sources of data that are particularly helpful. We've already addressed how press releases and conference call transcripts can provide information about management guidance. For public companies, there is an additional, widely used resource for helping analysts arrive at forecasts: Sell side equity research. Institutional investors and investment bankers often rely on the research reports produced by sell side equity research analysts (you can view a sample report here) to guide key forecasting drivers. These reports often include screenshots of 3-statement financial models and are available through the .
Cover page of a JP Morgan equity research report
Screenshot of an earnings model page of a JP Morgan equity research report
Earnings consensus estimates
In addition, equity research analysts submit key forecasts 2-4 years out for metrics like Revenue, EBITDA and EPS to the same financial data providers which, in turn, average these submissions and publish them as "consensus" estimates. Here is an example of consensus estimates for Brocade Networks as provided by Factset:
A note on private companies
Data is much harder to find for private companies than for public companies.
While attempt to aggregate as much data as they can find by scouring company press releases, quotes and leaks in the news and through direct outreach, in the United States and in most countries (with the ) are not required to provide the public with annual or quarterly reports. This means that building a for a private company is effectively impossible if the company does not willingly provide the data. In the , private companies considering a sale will provide data to potential acquirers as part of the .
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