Comparable Company Analysis- CCA

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Definition: Comparable Company Analysis- CCA

Comparable company analysis is a strategic process used to evaluate a company by comparing the operating multiples and equity multiples with those of other business which are of the same size, in the same industry. CCA has application in M&A, restructuring, IPOs and FPOs and share repurchases.

Operating multiples- Sales revenue, ROE, Profit margins, Enterprise Value/Sales, Enterprise Value/EBITDA

Equity multiples- Price/Earnings, Price/Book, Price/Sales

Process for doing CCA:

Advantages and Disadvantages of CCA:



  • Easy to calculate and communicate to market participants
  • Estimates are derived from market value rather than assumptions
  • Determines a benchmark value for multiples used in valuation
  • Influenced by market conditions
  • Not useful when there are a few or no comparable companies
  • Difficulty in finding appropriate comparable companies


1) A company O has an estimated EPS of $0.80 in 2016. How much is the stock worth in 2016?

First we need to do CCA for the 5 comparable companies

The CCA shows that companies are trading at 13.2(median) according to 2016E P/E ratio

Market price of share = 13.2 * $0.80 = $10.56

Hence the stock is worth $10.56 in 2016

2) Company O has an estimated EBITDA of $163.68(million) in 2016. How much is the stock worth?

The CCA shows that companies are trading at 4.3(median) according to 2016E EV/EBITDA ratio

Enterprise Value (in 2016) = 4.3 * $163.68 million = $703.84 million

(EV = Market Cap + Net Debt)

Net Debt = (EV – Market Cap), which was (589.25 – 461.25) = $128 million

Hence Net Debt in 2015 was $128 million

Market Cap (in 2016) = $703.84 million - $128 million = $575.824 million

Market price of share = Market Cap/ Outstanding shares

= ($575.824 million/45 million) = $12.796


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