We launched an updated version of our Comparison Analysis tools last week.

Here is a quick look at some of the new features:

1. We calculate an implied share price based on the weighted average of the selected comparable companies, so you can immediately see if the company is under or overvalued on this basis.
2. We use an EV/EBITDA comparison by default (or EV/Revenue for companies with negative earnings).  Subscribers can choose between these and seven other valuation metrics.
3. We choose a set of comparable companies, based on broad industry codes.  Subscribers can swap any of the companies we select for any of the nearly 9,000 other companies in the Valuecruncher database.
4. We show the weighted average value for the selected valuation metric.  Subscribers can update this value and see how this impacts the implied share price and the buy/sell recommendation.

This new tool is shown by default when you search for a company or click through from the industry or market links.

Register today to unlock Valuecruncher and get unlimited access.

Some examples: IBM & YHOO

Valuecruncher places an implied share price of $143.66 on IBM – this is 10.4% above the current share price.  This implied share price is driven by a weighted average of the EV/EBITDA multiples of key comparators Microsoft (MSFT), Oracle (ORCL), Hewlett-Packard (HPQ) and Accenture (ACN). The current IBM share price gives an EV/EBITDA multiple of 8.14x – this is in the middle of the comparator set. Some of these businesses have a larger services offering (IBM, HPQ and ACN) – but we see IBM being undervalued.  Subscribers can adjust the weighted average value to see the implied share price impact.

View our interactive valuation of IBM.

Valuecruncher places an implied share price of $12.02 on Yahoo (YHOO) – this is 22.7% below the current share price. This implied share price is driven by a weighted average of the EV/EBITDA multiples of key comparators Microsoft (MSFT), Google (GOOG), Time Warner (TWX) and IAC (IACI). Yahoo currently has an EV/EBITDA multiple above that of Google – a dollar of Yahoo EBITDA is being valued by the market more highly than a dollar of Google EBITDA. Yahoo looks overvalued at these levels. Subscribers can adjust the weighted average value to see the implied share price impact.

View our interactive valuation of Yahoo.

What is EV/EBITDA?

Enterprise Value (EV) is simply the market capitalization plus net debt (borrowings less cash). We use EV to capture the impact of debt and cash on a companies balance sheet – market capitalization doesn’t capture different capital structures when comparing companies. EV/EBITDA shows how a dollar of profit (measured as Earnings Before Interest Taxes Depreciation and Amortization) is being valued by the market against the comparator set.

The very smart Zack Miller asked that question on his blog. I could not help but respond – what is a 500+ word comment amongst friends. Here is that comment – with a few added links.

Why hasn’t Yahoo Finance changed in 10 years?

Yahoo Finance is a really interesting case. A key disruptor in Web1.0 then nothing.

You have seen my post.

Here is my quick take:

1. It isn’t that big a business for Yahoo (I think Yahoo Finance is $315 million a year in revenues – see above post for assumptions). That is approximately 5% of Yahoo’s (YHOO) total revenues of $6.46 billion LFY. Yahoo Finance is a big player in the free on-line finance space – but finance isn’t that big a part of Yahoo. Thomson Reuters had $13 billion in revenues LFY and Bloomberg had $6.1 billion in revenues in 2008. We over-estimate Yahoo Finance’s place in the financial data universe – guilty myself.

2. Business model – advertising based (primarily brokers and financial products). If Yahoo Finance innovates – they are likely going after the people that are generating their current revenues. Should they / could they disrupt the market further – probably. But I bet that there is concern about harming the current Yahoo Finance revenue base. Yahoo Finance is a solid earner as it is – why change things (possibly an internal view).

3. The platform is dated – Yahoo Finance is several base-platform generations older than Google Finance (for example) or Reuters free site. That makes keeping the platform stable probably a bigger job than we appreciate. Stability (and extending what they have) vs Innovation – stability appears the winner.

What might change the dynamic?

1. XBRL may be a game-changer. Uncoupling financial information from the existing raw data providers may generate a wave of innovation. New players (without the legacy issues) create base information platforms (not as good as Yahoo Finance initially) and quickly iterate with additional services (i.e. valuation) and disrupt the current on-line players (Yahoo Finance) and wider financial data players (Reuters, Bloomberg, etc). I believe Yahoo Finance keeps Reuters and Bloomberg awake at night today – that scenario may be even scarier for those players.

2. Thomson Reuters, Bloomberg, Morningstar and the other traditional financial data providers (very worried someone will make their multi-billion dollar industry a multi-hundred million industry) are playing really smart. The free Reuters site is amazing. From the outside it looks like these guys see the threat and are positioning to compete with free offerings. The traditional players may yet win the day – but I believe there will be, at a minimum, a value transfer from these players to the consumer.

Yahoo Finance – I think they may be the big loser caught in this cross-fire. Google Finance could be a player – but Google Finance is less of a contributor to Google than Yahoo Finance is to Yahoo. Umair Haque pushed for Google to do the job but Google has enough on their plate addressing the threat Facebook poses to their core business to worry about finance. I do really like Google Domestic Trends – it shows what could be done.

We want to see innovation in this space – and there has not been as much as some of us want. There maybe a step change coming – and that would be very cool.

Zack Miller has a new book out soon – Tradestream. It is on my must-read list.