How to Find Comparable Companies on Capital IQ
Finding comparable companies is a crucial step in investment analysis, as it allows investors to compare the performance and valuation of a company against its peers. Capital IQ, a leading financial data provider, offers a vast array of tools and resources to help investors identify and analyze comparable companies. In this article, we will guide you through the process of finding comparable companies on Capital IQ.
1. Accessing Capital IQ
To begin your search for comparable companies, you first need to access Capital IQ. If you are a subscriber, log in to your account using your username and password. If you are not a subscriber, you can sign up for a trial or purchase a subscription to gain access to the platform.
2. Navigating to the Company Search
Once you have logged in, navigate to the company search feature. This can usually be found in the top menu bar or on the homepage. Enter the name of the company you are interested in analyzing in the search bar and press enter.
3. Filtering the Search Results
After performing a search, you will be presented with a list of companies that match your query. To narrow down the search and find more relevant comparable companies, use the filtering options on the left-hand side of the screen. You can filter by industry, market capitalization, revenue, or any other relevant criteria.
4. Using the Sectors and Industries Tab
Capital IQ provides a comprehensive list of sectors and industries to help you find comparable companies. Click on the “Sectors and Industries” tab to explore different categories. Select the industry that is most closely related to the company you are analyzing, and you will be presented with a list of companies operating within that industry.
5. Applying the Fama-French Three-Factor Model
The Fama-French three-factor model is a widely used method for identifying comparable companies. This model considers three factors: market risk, size, and book-to-market ratio. Capital IQ allows you to apply this model to find companies with similar risk profiles and valuation metrics. To do this, go to the “Fama-French Three-Factor Model” section and input the necessary data for your company.
6. Utilizing the SIC and NAICS Codes
Standard Industrial Classification (SIC) and North American Industry Classification System (NAICS) codes are used to categorize companies by industry. You can use these codes to find comparable companies on Capital IQ. Simply enter the SIC or NAICS code for your company in the search bar, and the platform will display a list of companies within the same industry.
7. Analyzing the Comparable Companies
Once you have identified your comparable companies, it’s time to analyze them. Capital IQ provides a wealth of data and tools to help you compare financial metrics, valuation ratios, and other relevant information. Utilize the platform’s reports, charts, and tables to gain insights into the performance and valuation of your comparable companies.
In conclusion, finding comparable companies on Capital IQ is a straightforward process that involves accessing the platform, filtering search results, and utilizing various tools and resources. By following these steps, you can identify and analyze comparable companies to make more informed investment decisions.
