Making the Most of Peer Analysis

peer analysis

Here’s a paradoxically simple, yet complex question: How valuable is your company?

In its most basic form, a company’s value is determined by factors such as its financial performance, growth potential, and market demand for its products or services. Additionally, intangible factors like brand strength, intellectual property, and management quality can significantly influence a company’s perceived and actual value.

But to truly understand how valuable your company is, as an investor relations professional, you need to know how your competitors are performing. A peer analysis is invaluable for determining how you stack up within your industry. 

Here are some best practices to be considered in conducting peer analysis.

Review publicly available material

A great place to start is to look at the companies that your target investors own. Whether you share an industry or cap size, these peers can provide insight into what key investors are looking at. Review the positioning and messaging within this peer group to understand their investment theses. 

Learn how they communicate their financials, whether ESG is a focus, how they define their total addressable market, and how they position their C-suite. The context of understanding what your target investors expect can provide a template for developing and effectively communicating your story.

Begin with the low-hanging fruit served up on your competitors’ websites. Since many IR programs are conducted virtually, it presents an even greater opportunity to access and review written materials and virtual event recordings in almost real-time. Available on public IR websites, IROs can scan for keywords in peer transcripts, quarterly and annual reports, analyst research, press releases, and investor presentations to determine their stance on relevant topics.

Specifically, analyzing peer earnings and analyst event Q&A has become increasingly important. A key best practice is aggregating live updates on all the questions asked on these calls and sorting them by theme and relevancy. This can help quickly identify hot topics on the Street to ensure senior management is prepared to speak to these issues.

Examine social channels

Social media also provides an excellent opportunity to monitor the broader discussion around your company, competitors, and the market at large. Monitoring activity on your social channels and those of your competitors, industry media, and pundits is crucial for real-time feedback on what followers are saying and for gauging sentiment. 

This monitoring can preview market activity, even predicting share price movements and volatility. Observing the social media accounts of your competitors provides a low-cost and easy way to learn how they’re engaging investors, gauge their shareholder reactions, and gain insights into what may be on the horizon for your industry and your company.

Take a thematic approach

While simply identifying investors who own your peers is a great place to start, IROs must step up their typical targeting regimens and get more creative. 

Innovative IROs are responding to new challenges by taking a more thematic approach to investor targeting, moving beyond industry peers. Unlike industry peers, thematic peers might not play in your sector but share one or more personality traits that portfolio managers find attractive. While they may not own anyone in your space, target investors may find these traits compelling enough to initiate a position. 

While this strategy can be more challenging to screen for, it helps ensure the IRO is positioning the company within a market where there could be genuine interest. A thematic targeting approach requires a deeper understanding of key company characteristics and defining what the company represents. Expanding the base of potential targets using this thematic focus can deliver real returns by helping to get your carefully crafted and compelling equity story to the right audience.

Some examples of these themes are:

  • Market in which you participate (5G, Internet of Things, etc.)
  • Secular trends that you benefit from
  • Capital allocation strategy
  • Management pedigree

It’s all about accessing, analyzing, and utilizing data from various sources to understand your company’s position relative to your peers. In an age of seemingly infinite data sources, staying current on your industry’s relevant topics can be daunting yet necessary.  Learn more about how data can be leveraged to improve your IR efforts by reading the case study of AMD’s partnership with Q4 Surveillance or speak with one of our experts.

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