Sometimes, a simple numerical value isn't sufficient to determine whether a specific indicator's reading is good or bad. At times, comparing the current reading to its historical data isn't enough either, especially when there's a lack of historical data (i.e. after the fresh IPO). In such scenarios, the only way to draw a meaningful conclusion from a particular metric is by comparing it to similar companies within the same industry, otherwise known as 'peers'.
Peers on the company's profile page
The first way to do this is to display a reimagined profile of a company. On the right, you'll see a new module titled 'Peers'. It looks like this:
Here, not only can you find a list of companies from similar industries within the same country (Domestic) and from around the world (Global), but you can also quickly assess their approximate scoring results.
A red mark indicates that the company has a poor score, yellow suggests it's average, and green signals that the company is great (at least in terms of the criteria set in your selected model). All of this is determined according to the specific scoring model selected in the top-left corner. In this case, it's 'Growth at Reasonable Price'.
The peers' scores are updated and recalculated every time you open the company's profile page, ensuring that they are always as fresh and current as possible.
By clicking the grey 'Compare' button located at the end of either the Domestic or Global peers list, you can open a detailed view of the scoring, which looks like this:
Peers on the Master Chart
The second method is significantly more intriguing as it allows you to view each individual financial metric of the peers and analyze it over various time periods. This feature is incorporated into the Master Chart tool. To activate it, click on the dotted menu adjacent to the financial metric and select either 'Global Peers' or 'Domestic Peers'.
Thanks to this, you can easily assess whether a specific metric, such as an Operating Margin of 11.15%, is a good or bad result when compared to the industry's benchmark or average.
To calculate the peer's average and ensure its smoothness, we utilize a modified statistical concept called Z-Score. This helps us mitigate the effect of anomalies that could distort the results.
The Z-Score is a statistical measurement that quantifies a value's relationship to the mean (average) of a group of values in terms of standard deviations from that mean. Essentially, it aids us in identifying outliers, removing them, and making our average measurement more standardized.
This means that our peer's average isn't strictly the mathematical average, but a slightly adjusted one. This modification helps present a more 'realistic' result from which you can draw more relevant conclusions.
If you want to see exactly which peers we've used to calculate the average, click on the three dots near the company's name and select one of the 'Display peers' options.