... drawing a core model is akin to facing Ambrose without cricket gear. Building the core model (in analyst lingo - "earnings model") is critical. To build this you need a good understanding of the company, what it does and in which area. Financial analysts typically follow the following methodology for making projections. Sales Forecasting Is The First Step. In case of a multi product company forecasting for each product should be done separately. Key variables * Volumes for each product and category * Unit realization for each product separately For volume growth (or decline as the case may be) estimates, one should look at past trends, industry outlook, company's competitive position and estimated market share. Unit realization forecast would depend on price trends, discounts offered by the trade, prices of competing products, etc. Pricing power of various players and their likely pricing strategies also have a significant influence on the forecast. If one is starting ...

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