The Relative Valuation (RV) function helps you identify comparable companies, in order to better evaluate the company that you are analyzing.
Relative Valuation compares the key metrics and values (such as market capitalization, enterprise value...) of a company with other companies with similar characteristics.
First of all, type in the command line the name of the company you want to evaluate, click the option “Equity” among the suggested results and load the security.
Type “RV” in the command line and press “GO”, or select “Relative valuation” from the Related functions menu:
You will get a screen showing both the data of the company we are evaluating and that of the comparable companies:
Bloomberg provides multiple lists of peer companies, based on different criteria: open the "Comp Source" drop-down menu and select the source: we can use a Bloomberg-defined peer list, or get a list based on GICS sectors and sub-sectors, or even create a custom list:
Although the “RV” function is very helpful in selecting comparable companies, it is recommended to always verify their comparability by double-checking, for example, the main sector of activity, the market capitalization value, the average number of employees, the geographical area and so on.
If you want to customize the list by adding specific companies, click the “Edit” pen icon and type in the <add security> field:
Once your list of peer companies is created, you will see different tabs in the upper part of the table:
The “Overview” section shows key information such as market capitalization, the latest market price, EPS, P/E and ROE.
The "Comp Sheets" section is made of 4 different subsections: Equity Valuation (including the main stock market multiples), CDS Spreads, Profitability (including the profitability indices and growth margins of the main income values ) and Balance sheet (including the debt and financial leverage ratios).
“Markets” is another important section: here you can find the Beta, which is critical when you want to calculate the weighted average cost of capital (WACC) of the company.
Finally, if you want to customize your list, you can click the “Custom” tab, then click “Fields”:
A Browse fields window will open: here you can search for the information you wish to be displayed in your report, for example "Net Debt"; set the time period using the drop-down menu and click “Update”: a “Net Debt” column will be added to your custom table:
