Trading Comparables
Learn to spread trading comps, including picking the right comp set and computing valuation multiples
Overview
This course focuses on the strengths and weaknesses of trading comparables as a relative valuation methodology. Topics covered include how to pick the appropriate set of comparable companies, spreading the actual comparables and computing the valuation multiples.
- Factors to consider when identifying comparable companies
- Key metrics and multiples
- Determining a company’s value (spreading a comp)
- Calculating diluted shares outstanding and market capitalization
- Scrubbing the balance sheet to look for invested capital items
- Calculating clean, recurring earnings for each comparable company
- LTM
- Calendarization issues
- Use of consensus for forward multiples
- How to apply the correct multiples to target earnings to derive the implied enterprise value and share price