39. Comps

39. Comps

Comparable companies analysis is so popular in investment banking that, like Madonna, it simply goes by one name, “comps.” Investment bankers love to look at comps to see how companies in are doing against their competitors. Most presentations will include a page showing the stock price, market cap, and some other financial metrics for the client’s comp set. Some higher ups will opt to include to a simple Excel table with the companies and metrics, but other bosses want to show their creativity with a pretty visual showing where the comps rank against each other in various metrics.

When a higher up want to see the comps for a company he will ask an analyst to “spread the comps.” Usually I opt to reply by telling my boss to spread his butt cheeks and stick the comps up there. I’m guessing he would enjoy that experience if the comp set were big enough... Setting up a comps page in a presentation can be an easy exercise if the group has a file that is updated quarterly for the financials of a bunch of companies in the industry. This will make things easier because it means all I have to do is format a page, which is what an analyst does best. I like to think of myself as a glorified assistant who is the master of the Microsoft suite of products.

During a meeting, a comps page is usually not a huge page of interest, since it is just a whole bunch of numbers and will not convince a company to do a deal or raise capital. However, this comps page can be the most scrutinized by the associate and MD because they want each number to be correct and make sure every company they are interested in is shown. When the boss decides to start adding companies, new metrics, and wants the financials updated for the most recent quarter despite the group file not having been updated yet, this easy comps task but an arduous affair. Digging through 10-Ks, 10-Qs, earnings releases and financial supplements to find company data is about as fun as a trip to the dentist’s office (for the non-masochists out there). After finding all this data, putting it into Excel, and formatting the page as the higher up wants it, the fun still does not end! You may be asking “How much more fun can one analyst have in the job?!?!” Well, my friend, in comes the high-rolling, life-loving, jacka$$ associate who wants to check every single number and make sure the analyst is there to walk him through it all. So, not only did I get to find all the numbers once and note where I got them, but also I have the pleasure of teaching my dimwitted, feeble-minded associate how to read a note in Excel and open PDF files. Hoorayyyyy banking!