We launched an updated version of our Comparison Analysis tools last week.
Here is a quick look at some of the new features:
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- 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.
- 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.
- 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.
- 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.