workflow-er-model-update

name

workflow-er-model-update

description

WHAT: Financial model revision and accompanying analyst note when material new information arrives — quarterly earnings, guidance change, M&A announcement, or macro shift. Produces an updated three-statement model, revised DCF and price target, and a side-by-side old-vs-new estimate table with change rationale. WHEN: Invoke when new information is material enough to change model assumptions by >5% in any forecast year — following an earnings release with a guidance change, an M&A announcement affecting the company, or a significant macro shift (interest rate change, FX move, commodity price shock).

Equity Research: Financial Model Update

What this skill covers

A structured model revision workflow triggered by material new information. Isolates which assumptions changed, updates the three-statement model, recalculates valuation, and produces a concise revision note with side-by-side estimates and a rating decision.

Inputs

• Company ticker and the triggering event (earnings, guidance change, M&A, macro shift)
• Prior model assumptions (from the most recent workflow-er-initiating-coverage or previous model update)
• Updated inputs provided by the triggering event

Workflow

Step 1 — Identify changed assumptions

Pull latest actuals or announcements:

• For earnings: call fmp_income_statement with latest period
• For M&A: pull transaction details and synergy assumptions
• For macro: note interest rate, FX, or commodity change and its P&L impact

Compare actual vs prior model assumptions. Identify:

• Which line items changed (revenue, margin, capex, WACC, other)
• Direction and magnitude of each change
• Whether the change is one-time or persistent (affects forecast run-rate)

Materiality threshold: changes >5% to any forecast-year revenue, EBITDA, or EPS trigger a full model update. Changes <5% trigger a note only.

Step 2 — Update the three-statement model

Call three_statement_model with revised assumptions:

• Adjust revenue growth, gross margin, operating margin, capex, working capital as warranted
• Re-solve the interest expense / revolver draw circular reference
• Verify: A = L + E in every forecast period after update

Step 3 — Recalculate valuation

Call dcf_model with updated projections:

• Revised DCF value with updated free cash flow stream
• If WACC changes (due to macro shift): recompute via wacc_calculator first

Call target_price with updated DCF and comps:

• Call comps_analysis if peer multiples have shifted materially
• Produce the revised blended price target

Call sensitivity_matrix with updated inputs:

• WACC ±100bps vs TGR ±50bps minimum
• Add the changed variable as a third sensitivity axis if it is the primary driver

Step 4 — Rating review

Assess whether the model revision changes the rating:

• Maintain: new PT within ±10% of prior PT, thesis unchanged
• Upgrade: new bull/base PT materially above prior, thesis improving
• Downgrade: new bear/base PT materially below prior, thesis deteriorating

If a rating change is warranted, trigger workflow-er-thesis-tracker to update scenario weights.

Step 5 — Revision note

Produce the model update note:

1. Headline: old PT → new PT, rating maintained/changed, event trigger
2. What changed: bullet list of revised assumptions with direction and magnitude
3. Old vs new estimates table:

Metric	FY[prior] actual	FY[n] old est	FY[n] new est	Change	FY[n+1] old	FY[n+1] new	Change
Revenue ($M)
EBITDA ($M)
EBITDA margin (%)
EPS ($)

4. Valuation update: old PT, new PT, methodology (DCF weight, comps weight)
5. Updated sensitivity tables
6. Rating decision with rationale

Output format

• Revision note: 2-4 pages (concise, focused on what changed and why)
• Updated estimate table (old vs new side-by-side)
• Updated sensitivity matrix
• Rating decision with explicit rationale

Quality gates

• Materiality check documented (>5% change triggers full update)
• three_statement_model re-run with revised inputs — not adjusted manually
• dcf_model and target_price re-run with updated free cash flows
• A = L + E verified post-update
• Old vs new estimates table complete for at least 2 forward years
• Rating decision explicitly stated: maintain / upgrade / downgrade

Related skills

• workflow-er-earnings-update — earnings notes that frequently trigger model updates
• workflow-er-thesis-tracker — scenario weight revisions when a rating change is warranted
• workflow-er-initiating-coverage — original model that this skill updates
• workflow-deal-citation-standards — citation format for revised tool outputs in the revision note