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Comparable Company Analysis
See how any stock stacks up against sector peers on P/E, EV/EBITDA, P/S, P/B, revenue growth, and net margin. Color-coded cells show where your stock is cheap or expensive vs. the sector median.
How Comparable Company Analysis Works
What comps analysis tells you
Comparable company analysis (comps) is the first valuation method taught in investment banking. It answers a simple question: is this stock cheap or expensive relative to peers? A stock trading at 15× P/E looks expensive in isolation — but if the sector median is 25×, it may actually be undervalued.
Use comps as a relative sanity check alongside absolute methods like DCF analysis.
Which multiple to use
P/E is the most widely used — but only works for profitable companies. EV/EBITDA is better when comparing companies with different debt levels. P/S is useful for high-growth companies with thin or negative margins. P/B is favored for banks and asset-heavy businesses.
For a deep dive on EV/EBITDA, use the EV/EBITDA calculator.
When cheap is a trap
A stock trading at a discount to sector peers can be a value trap — cheap because the market sees something you don't: declining revenue, margin compression, or cyclical risk. Always check growth and margin metrics alongside valuation. A stock that is cheap and growing faster than peers with better margins is the real opportunity.
Comps in context
Professional analysts triangulate across three methods: comps (relative valuation), DCF (intrinsic value), and precedent transactions (M&A context). Start here to see where the stock sits in the peer group, then run a DCF to check whether the absolute valuation holds up. Read the full guide: valuation fundamentals.
Frequently asked questions
What is comparable company analysis?
Comps evaluates a company's valuation multiples — P/E, EV/EBITDA, P/S, P/B — against publicly traded peers in the same sector. It answers: is this stock cheap or expensive relative to competition? It's the most widely used relative valuation method in investment banking and equity research.
What multiples are used in comps?
P/E (price-to-earnings) is most common. EV/EBITDA is preferred when comparing companies with different capital structures. P/S (price-to-sales) is used for high-growth or unprofitable companies. P/B (price-to-book) is standard for banks and asset-heavy sectors.
How are peer companies selected?
Peers are selected from the same GICS sector and industry, with similar business models and scale. This tool uses Yahoo Finance recommendations and sector classification to surface peers automatically. You can override the ticker to compare any two stocks.
Is a lower P/E always better?
Not necessarily. A low P/E can mean the market expects declining earnings, not that the stock is cheap. Always check revenue growth and net margin alongside valuation multiples. Cheap on P/E but shrinking revenue is a value trap; cheap on P/E with expanding margins is a potential opportunity.