Learn how the thinkorswim Mobile Company Profile tool can help investors discover what's creating a company's value.
While many investors use the thinkorswim® Mobile platform to make quick, convenient trades, the platform also has sophisticated analytical tools—such as the Company Profile tool—that can help investors move beyond the basics. Available on both the tablet and mobile versions of the thinkorswim Mobile app, the Company Profile tool allows investors to take a deeper analysis to discover what’s creating a company’s value.
Additionally, this tool gives investors the opportunity to perform their own “what-if” scenarios given their investment assumptions about a company’s future performance and ultimately may help them make investment decisions. Unfortunately, the Company Profile tool is not available for all companies. However, it’s available on 169 stocks—most being larger, well-known stocks—so investors may want to consider adding this tool to their stock analysis repertoire.
To access the Company Profile tool, log in to thinkorswim Mobile, load a stock on the Quick Quote menu, and then select Profile from the available choices near the top of the page. Once the results appear, you’ll see an interactive diagram of the company’s revenue-generating divisions (see figure 1). Each division is represented as a percent of market cap or value of the company.
As shown in figure 1, General Electric (GE) derived most of its market cap value from its Aviation (52.2%) and Healthcare (32.3%) segments. Other divisions, and even cash balances, can be seen if you scroll down the screen.
FIGURE 1: FIND A STOCK’S REVENUE-GENERATING DIVISIONS. Each division is represented as a percent of market cap or value of the company as seen above. Source: thinkorswim Mobile. For illustrative purposes.
Of course, depending on which company’s profile you view, you may see very different revenue-generating divisions for that company. A pharmaceutical company may be broken down by the categories of drugs they sell. A snack food company may be broken down by the regions of the world in which it operates. Each company is different.
Additionally, above where these divisions are listed on the screen, there’s a Trefis Price Est. for the company, which is a comparison of the Trefis estimation of the company’s “true value” as generated by this pricing model versus the company’s current market price. In the GE example, this price estimate shows that, according to the Trefis model, GE is worth 18% less than what the market is currently pricing the stock. Note: Company Profile (Trefis) estimates are provided by Insight Guru, a separate and unaffiliated firm. Remember that stock prices are impacted by numerous factors and estimates of future stock prices provided by the tool are not guaranteed, but it’s a quick way to gain a different perspective on a company’s value.
However, your analysis doesn’t have to stop at this level. By selecting a particular area of value, you can view a breakdown of what’s driving that division. In the GE example, selecting Healthcare generates this screen (see figure 2):
FIGURE 2: LOOKING UNDER THE HOOD. Choose a particular area of value, in this example, the healthcare division of GE is selected. Here, investors can view a breakdown of what’s driving that particular division. Source: thinkorswim Mobile. For illustrative purposes.
As you can see, this generated some principal drivers for the performance of GE’s Healthcare division, as well as the forecast for approximately the next five to seven years for this area. For example, its Healthcare EBITDA Margin is expected to rise to 28.15% and hold steady over the next five years. But what if this Trefis model doesn’t match your expectations for the company?
One great feature of the Company Profile tool is that users can modify the forecast for the selected driver of value, which in turn may change the division diagram, as well as the resulting value for that division. To change the estimate on the value driver, select the particular forecast you’re interested in, and you’ll see a graph appear that includes handlebars, which can be selected and dragged up or down, thus revising the future forecast (see figure 3).
In the case of GE, dragging the Healthcare EBITDA Margin higher will ultimately result in a higher estimate for that division and consequently the whole company; likewise, dragging the handlebar lower will result in lower estimates. You can compare the new estimated value to the stock’s current market value or the original Trefis estimate, which may help you decide if you think the market price for the security is currently overvalued or undervalued. There is a Reset Chart button you can use to conveniently run through repeated valuation scenarios.
One challenge many stock investors have is knowing how one facet of a company’s performance might affect the overall company, and consequently, its stock price. Scouring through news stories and listening to pundits may have a role, but having the ability to easily model the effects of different financial parameters to the company’s stock price can take your analysis to an entirely new level. The Company Profile may be the tool you need to do just that. So next time you access your thinkorswim Mobile app, check out the Company Profile for stocks you’re interested in.
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