chptr 1 - Comparable Companies Analysis

Question 1

What does comparable companies analysis consists in?

Answer 1

Peer companies are benchmarked against one another and the target based on various financial statistics and ratios

Question 2

Which are the most common used trading comps?

Answer 2

Enterprise Value-to-EBITDA (EV/EBITDA), Price-to-Earning (P/E)

Question 3

Is trading comps an intrinsic based or a market based type of analysis?

Answer 3

Comparable companies analysis is designed to reflect “current” valuation based on prevailing market conditions and sentiment.

Question 4

Which are the main steps of a trading comps analysis?

Answer 4

1 - select the universe of comparable companies
2 - locate the necessary financial infotmation
3 - spread key stats, ratios, trading multiples
4 - benchmark the comparable companies
5 - determine valuation