Identifying true comparables

While comparables analysis is used in conjunction with some other form of absolute valuation techniques, I was just wondering how ER Analysts with extensive experience use them to supplement their absolute valuation methods for their investment thesis.

So I am trying to find out "true comparables" for firms, in the same industry. To illustrate, take Facebook for an e.g. its very dominant in its industry, safe to say clear monopoly in the Social Media space. Its competing firms IMO would be Google+, Linkedin, may be even Zynga.

But the problem is, while they have some similar characteristics, Google has many other businesses in addition to its Google+ (which is prolly its most useless), Linkedin while it signs up and connects users, but it generates revenue from advertising, fees from recruiters, and membership fees from users. Zynga generates revenue from advertising as well as fees from online gaming.

So clearly, none of the firms in here are what would be called "true comparables". So I wanted to know, what might be an alternate way to identifying comps, and in many cases, they prolly don't have any comparables. So just leave it out??

I would love to hear your viewpoints, and some examples would be great as well. Would love to hear opinions from guys who have extensive comps analysis experience.

Thanks a bunch

 

No extensive comps analysis experience here.

You may want to look outside the US as well. Aren't there any Chinese or Russian facebook-style public companies?

Just a thought, don't know if it helps but if you can't find a local comp then venture further.

Also, look at comparing the business model, not the operating front. What I mean, don't try to compare Facebook with Google+, try to compare Facebook with a company that makes its money through selling online advertising (that's where Google, regardless of the +, comes in).

Obviously you'll not find twin companies, but as long as they face similar risks and business models they are comparable enough.

 

Voluptatem commodi ducimus possimus quia nostrum animi. Rem et hic ab necessitatibus nostrum. Et amet earum vero deserunt inventore doloribus. Eveniet ea dolorem sint et aliquid quos et veniam.

Career Advancement Opportunities

March 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. (++) 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

March 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

March 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

March 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (13) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (202) $159
  • Intern/Summer Analyst (144) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”