Peer analysis in one of the most common methods of financial analysis used by analysts and investors to compare stocks and to assess the value of a company using metrics of other companies of similar size operating in the same industry.
To carry out such analysis, first we need a list of comparable companies. This can be obtained using LSEG Workspace.
First of all, we need to type the name of the company we want to evaluate in the blue search bar and then select the most relevant result from those suggested.
Once the desired result is selected, a tab with the main information about the company will open.
Specifically, the company information is organized into several categories (Overview, Financials, ESG …). From the horizontal menu we have to click on the "Peers and Valuation" tab.
Specifically, the Peers and Valuation tab consists of several sections, some of which relate to peer selection (Peer analysis, Sector Competitors, Index Competitors, and Stock Comparison) and others to valuation models (the relative valuation method and the intrinsic valuation method).
PEER ANALYSIS SECTION
If we click on the "Peer analysis" section, it will appear a screen in which at the top there is a graph of the P/E multiple trends while at the bottom there is a list of comparable companies.
Notably, Refinitiv provides several criteria by which the list of peers companies is created.
In fact, by first clicking on "Edit Peers" and then through "Sample Peer Set" box we can select or enter the source used to determine the comparable companies for the company under analysis.
Specifically, LSEG Workspace offers the following sources that can be used to determine peers companies:
The default Peer set is the top seven securities suggested from StarMine Peers.
In case we want to customize the default list through the addition of other companies, we can edit the peer group using the "Add security" input box by typing the name of the company we want to add. Once the company is found it will automatically be added to the list.
In addition, it is possible to remove any Peer by using the remove icon that will appear upon hovering over the company you wish to remove from the list.
If you want to revert to the LSEG suggested peers, click the link to “Reset to Default Peers” and the security’s original LSEG Peers will be restored.
Once we have the desired list of companies, we can create a customized list of entries. To do this we will need to click on the icon “Launch data item library” next to the "Add Column" box.
Next a tab will open wnere we can search the variable we are looking for (e.g., Company Market Capitalization) through the different categories (under “Category”) on the leftside or just entering it in the “Enter filter text” field. Finally, to add the column in our custom table we will just click "OK".
Different from the Peer Analysis section, here we can select only two sources that can be used to determine peers companies. Those are two sector classification criteria: GICS (Global Industry Classification Standard) and TRBC (i.e., industry classification system owned by LSEG) which select relates companies to the focus company, by way of first their main business sector and then of specific sub-sectors.
At the top of the screen, we can customize our list by selecting a specific sub-sector, a specific region and a market capitalization range. To update the list with the new filters, just click on “Update view”.
Once the desired list of companies is obtained, from the menu “report” one or more of LSEG default value tables or a custom table can be displayed for our list of companies.
Among the default tables we have:
You can also create a custom table by clicking on "Customize" and then "Customize table".
The following tab will open where you just need to select the values you want to include in the list.
From this section peers can be selected both by sector but also by whether or not they belong to the same market indexes as the focus company.
Among the indexes that can be selected the most important are the NASDAQ index, the NYSE index and the DJA index.
From the report menu you can select one or more of the tabs described earlier for the sector competitor’s section.
Through this section unlike the previous ones we do not obtain a list of comparable companies. This tab is useful if we want to have a specific comparison with only a few companies that can be selected from the drop-down menu or by manually entering the relevant RIC code.
Once you have entered the companies you want to compare, you can display one or more default tables of values: