When performing valuations, selecting the right group of peers is crucial. Valutico's peer selection process helps you identify companies that share similar risk characteristics with the one you're valuing. This guide will help you get started with the Peers feature on Valutico.
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The goal of peer selection is to compile a group of companies that closely resemble the company you're valuing. Among others, consider these key factors:

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Valutico's Trading Comparables valuation methodology relies on the principle that publicly listed companies similar to the target company should have similar trading multiples. These multiples include Enterprise Value/Sales, Enterprise Value/EBITDA, Enterprise Value/EBIT, Price/Earnings, and Price/Book.

Once you've identified a suitable set of comparable publicly traded companies, the Peer screen in Valutico displays their relevant multiples and calculates the median of the set.

You can also apply a further discount to the median if needed. This discount typically accounts for factors like differences in company size compared to the peers, as well as risks such as lack of liquidity or marketability. Users can adjust for a control premium here as well.

Debt-to-Capital ratio (D/C), Debt-to-Equity ratio, and Credit Spread are all important inputs for the calculation of Cost of Capital, which forms the basis for the Discount Rate calculation. Default values for these parameters are derived from the peer group.

The Credit Spread is determined using the estimated effective debt interest rate, which is calculated by dividing a peer's latest Fiscal Year interest expense by its most recent Fiscal Year debt balance. The Credit Spread is then calculated by subtracting the Risk-Free Rate of the country where the company is headquartered.

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Beta measures the relative riskiness of a listed company compared to a suitable index. The median Beta of the peer group reflects the market's perceived riskiness of the industry in which the target company operates. It's essential to ensure that your set of peers represents a similar industry risk profile

Your valuation project in Valutico will come prepopulated with 15 peers, influenced by your inputs, among other things the country/region, industry, and similar public company. As a first step, review this list and remove companies that you don't consider similar enough to your valuation object.

You can quickly understand each company by hovering your mouse cursor over the "i" icon next to the company name. To remove a company, click the three dots to the left of its name and select "remove" or use the checkbox for multiple selections.

For in-depth research, click the icon next to the company's name to access additional information, including company profile, financials, similar peers, and Beta calculations.

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The "Median" line displayed on the Peer screen reflects the median of the observed peer values. The discount to the median is based on the Qualitative Assessment (QA) by default, but if the QA was skipped, the default discount/premium is 0%.

The "Industry Median" provides a global industry median as a benchmark. It doesn't influence the valuation data, but is for informational and benchmarking purposes.

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You can search for similar peers in four ways:

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For more information on selecting peers, you can download our whitepaper.