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Scenario Analysis Explained: Base, Bull and Bear

6:03 393 views Oct 8, 2026 Equities

About This Video

Scenario analysis tests stock valuation under base, bull, and bear cases by changing revenue, profit margins, and P/E assumptions together. You’ll learn how to connect a business story to net income, earnings per share, and an implied share price. I walk through a hypothetical $20 stock with one-year estimates of $22, $36, and $10.80, corresponding to a 10% gain, an 80% gain, and a 46% loss before dividends. I also explain scenario analysis versus sensitivity analysis, why scenario outcomes do not tell you their probabilities, and how to check whether a scenario is coherent and plausible. Whether you’re learning equity valuation or testing an investment thesis, use this example to build and compare your own scenarios.

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Chapters
0:00 – Scenario Analysis: Three Possible Futures
1:24 – Base Case Valuation
2:23 – Bull Case Valuation
3:22 – Bear Case Valuation
4:05 – Comparing Outcomes and Risk
4:49 – Scenario vs. Sensitivity Analysis
5:06 – Building Plausible Scenarios
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*Disclosure: This is not financial advice and should not be taken as such. The information contained in this video is an opinion. Some of the information could be wrong. This channel is owned and operated by Ryan O’Connell Finance LLC. Some of the links above are affiliate links, meaning, at no additional cost to you, I will earn a commission if you click through and make a purchase.

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