Comparable company analysis, or trading comps, is one of the most widely used valuation methods in practice. This tutorial from Breaking Into Wall Street shows how it is actually done, from choosing peers to arriving at an implied value.
- Selecting a set of comparable listed companies by industry, size, geography and growth
- Choosing and calculating the right multiples, such as EV/Revenue, EV/EBITDA and P/E
- Applying the median or quartile multiples to estimate an implied enterprise value, equity value and share price
Where Prof Damodaran's Relative Valuation – First Principles session in this section explains how to think about multiples, this video shows the mechanics. It is a useful reference for anyone reviewing the market approach in a valuation report.