Q&A: Financial Analysis and Valuation Books

Someone who reads the blog emailed me this question:

Hi HurricaneCap!

I’ve been following your Twitter handle and blog for quite some time now, and have to say, it’s an amazing repository of knowledge. Thanks for that!

I was wondering if you could help me out a bit with regards to book recos for financial analysis and valuation specifically. There are ample quality books on the psychology behind investing, biographies of great businessmen and investors, but when it comes to financial analysis and valuation, I can’t seem to find a good starting point. Could you lead me to that?

I look forward to hearing from you soon!

Many thanks,

XYZ

Thanks for writing. Good question there. I have a few books I can recommend and I have put together a list containing a few of the books that I think could be of great help to you.

If you want to read one book, read the first one in the list below. If you want to read two, take the first to, etc. You get it. Or, just pick one book that you find interesting. I’m not saying you should, or even need to, read all of the books included in the list. I don’t recommend books that I haven’t read myself. So yes, I have read all of them myself. Some of the books more than once, but that’s not the important part here. Remember, it’s not a competition where the person who reads the most books wins in the end. Reading the first one, and being able to use the framework presented in that book will take you far. If you go on and read all of the books you will also see that a lot of things are the same. Still, a few things differ and reading different books is also a great way to reflect upon the ideas presented in each book, and also about what differentiates one book from another. It’s also a great way for yourself to collect different parts from different books that you find to be of greatest use and by doing so putting together your own toolkit, your own framework for business analysis and valuation.

  1. Financial Statement Analysis and Security Valuation, 5th Edition, by Stephen Penman
  2. Competition Demystified: A Radically Simplified Approach to Business Strategy, by Greenwald and Kahn
  3. Valuation: Measuring and Managing the Value of Companies, 6th Edition, by Koller, Goedhart, and Wessels
  4. Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports, 3rd Edition, by Howard Schilit
  5. Quality of Earnings by Thornton L. O’Glove
  6. Accounting for Value by Stephen Penman
  7. Business Analysis & Valuation: Text and Cases (IFRS edition), 3rd Edition, by Palepu, Healy, and Peek
  8. The Interpretation of Financial Statements by Benjamin Graham
  9. What’s Behind the Numbers?: A Guide to Exposing Financial Chicanery and Avoiding Huge Losses in Your Portfolio by Del Vecchio and Jacobs
  10. From Graham to Buffett and Beyond by Greenwald, Kahn, Sonkin and van Biema

Remember, this is my list. I’m sure there are lots of other great books out there, you just have to find them. If you do, feel free to share your insights.

Hope it helps.

 

3 thoughts on “Q&A: Financial Analysis and Valuation Books

  1. No one has contributed to the theory and practice of Valuation than Aswath Damodaran. His books are by the most superior works Valuation. “Valuation by Damodaran” and “Investment Valuation”

  2. Wouw! Nice to see another Stephan Penman fan!

    I, too, have read Accounting for Value and some chapters from his other book.

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