What a sector comparison tells you, and what it does not
Comparing a company with others in its industry: how to choose the peers, which figures compare well, the traps of size, accounting and timing, and the limits of any comparison. Educational content.
A number on its own says little. An operating margin of 6% is thin for a software company and ordinary for a food retailer. Putting a company next to others in the same industry gives its numbers a context, as long as the comparison is fair.
Choosing the peers
- Same business, not just the same label. A bank that mostly lends to households and one that mostly serves large companies are both "banks", but they work differently.
- Similar size, or at least the same order of magnitude. Scale changes costs and margins.
- Same market or region, where regulation, taxes and wages are comparable.
- Three to six peers is usually enough; more makes the table harder to read, not more accurate.
The industry pages give a starting overview of sectors such as banking, energy and automotive.
Figures that compare well
- Margins (operating result ÷ revenue): size-independent.
- Growth rates over the same years.
- Debt to equity and current ratio, within the same industry.
- Operating cash flow ÷ revenue.
Absolute figures (revenue in millions) mostly show size, not quality.
Four traps
- Different financial years. A year ending in March and one ending in December cover different months.
- Different accounting frameworks. Hungarian accounting rules, IFRS and US GAAP can treat the same item differently. Check which one each report uses.
- One-off items in one company's year and not in the others'.
- Currencies. Convert at a stated rate and date, and write both down.
What a comparison cannot tell you
It shows where a company stands relative to the chosen peers at the chosen time. It does not explain why, and it does not say what will happen next. If all the peers are in a difficult period, the "best of the group" may still be in difficulty. A comparison is a question generator: each large difference is a reason to open the notes.
Sources first
For Hungarian companies, published annual reports are on the Elektronikus Beszámoló Portál; for US-listed companies, on SEC EDGAR.
A sourced profile of one company
DAS single-company analysis: one company, one framework (K1–K4), a sourced PDF within 24 hours. $5 for one, $29 for 10; the first analysis is free for a new customer with ELSOINGYEN.
Related: Where to find a company's financial statements · Market structure
Educational content. Not investment advice.
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