What is consensus data based on?
The consensus data in Valuatum system consists of two elements:
- Basic research data produced by one independent analyst.
- Consensus estimates including the most important estimate variables: net sales, operating profit, pre-tax profit, EPS and dividend per share. The figures are typically available for a couple of estimate years and usually also for a couple of next quarters.
These two elements are combined in Valuatum consensus system so that consensus estimates are added on the top of complete research data produced by one analyst. Therefore consensus estimates replace all the data produced by one analyst where consensus data is available.
How consensus data is shown in the system?
Consensus estimates are presented with their own color like in the picture below:
When you set your mouse over a colored number, you can see a tooltip that tells how many banks have been used for producing the consensus estimate.
Combining consensus estimates and basic research data and calculation of key figures
Combining consensus estimates and basic research data means that almost all of the key figures are calculated from consensus estimates and are mostly based on them, although large amount of basic research data is also used in these calculations. Some examples may clarify this better:
P/E figure consists of two elements: earnings per share and share price. Earnings per share is based on the consensus estimates in the Valuatum consensus data, and the share price is acquired every day from an external data provider. Thus, the P/E value of the Valuatum consensus data is directly based on the consensus and the actual price (the closing price of the previous day).
P/BV (Price/Book value)
The price in the P/BV value still is the closing price of the previous day, but BV i.e. substance (own capital’s book value) is taken from the balance sheet, which is from the basic data of a single analyst. In practise, however, also this consensus estimate includes a dominating element. Let’s take for example the book value of the current year: in the Valuatum model, it is calculated from the book value of the previous year, paid dividend, and the earnings of the current year. Two foremosts are historical figures, and thus every analyst that has carefully prepared his data has exactly the same figures.
In the Valuatum system, the correctness of the history figures is ensured by its users as well as the competition between analysts. The analysis is shared with a vast amount of users and with the company in question. Normally users and analysts are quick to point out mistakes and therefore there should not be any. In the other hand, the third component of the P/BV value, i.e., the earnings of the current year, is taken directly from the consensus figures. So none of the parameters are directly from a single analyst in the end. Hence, although the P/BV value isn’t directly derived from the consensus estimates, it is still totally based on both the consensus and non-changing history figures.
Most key ratios are generally based strongly on consensus data
To majority of other key financial ratios, for example return on capital (ROI-%, ROE-%) and valuation figures (EV/EBIT, EB/EBITDA, dividend yield, PEG etc.), applies the same as to the P/BV-ratio. These ratios contain many computational elements and thus data from the Valuatum system, produced by an individual analyst, is widely used. In spite of this, they practically never include discretionary elements (earnings forecasts) from any individual analyst. The ratios are based on historical realization data, objective figures (e.g. number of shares) and consensus estimates.
In some cases the ratios include estimates from the analyst. However, the effect of these estimates is very small. For example regarding the balance sheet, while calculating the return on investment (ROI-%) company’s invested capital is used in division of the (consensus) operating profit. Even though it is mainly derived from historical data and the consensus estimates, to what extent the Valuatum analyst considers the balance sheet to include non-interest bearing debt has some effect on the ratio. In these cases the estimates seldom differ much from the historical realization (proportion of non-interest bearing debt from the balance sheet) and even if the analyst would have forecasted a 30% change from the current level (rarely the case) the effect on the ratio itself, herein ROI-%, remains marginal.
The forecasts produced by an individual analyst, as mentioned above, are in practise produced and revised by several competing analysts. However, the figures are always taken from the model of the number one analyst of each company. Consequently, one given analyst is at all times responsible for each estimate.
Counting divisional and other detailed result figures
Consensus estimates from outside never include divisional estimates, and sometimes even quarterly figures from some companies are not available. In a case like this, the figures in question are generated on basis of higher level consensus estimate. This means, that divisional figures are being calculated on the basis of consensus estimates of corporate level so that basic data’s divisional level figures are being used in allocation to divisional level.
Thus, if estimations of operating profit in the basic data for three divisions of a single company are for example 100, 200, 300 (600 in total) and consensus estimate on corporate-level is 660, the estimation for divisional level will be generated: 110, 220, and 330 so that difference of 60 (10%) in basic estimate will be shifted on to divisional level also. Just as well, “allocating in relation to old estimations” -method is also used in generating results for quarter level, if the consensus estimates would for some reason not be available for certain companies.
How to use multi-criteria rankings?
Creating a multi-criteria ranking list
Lets assume for example that you want to rank all companies based on their ROI % and P/E. This can be accomplished by following these steps:
Note: You can also select which companies you want to rank. Instructions for this can be found below.
- Go to Comparisons/Multi-criteria Rankings
- Click Make your own ranking list
- Fill out a name for your query in the field Page (query) name
- In the parameter column, select ROI % from the drop-down list as the first ranking criteria. Fill out also other fields (more information on different fields can be found by clicking the question marks above the fields):
- Time = the year/quarter whose figures you want to see
- Limit Value = a value that companies must exceed in order to get any points
- Target value = a value that will give the company 1 point
- Weight = the weight you want to give to this particular parameter when calculating the final points
- Maximum points (optional) = maximum points that one company can get from this parameter
- To add another ranking criteria, click Add parameter, this time select P/E as the parameter and fill out all required fields as above.
- Finally to see the ranking list you made, click Save and query.
Selecting the companies you want to rank
By default, all companies in the database are visible in your rankings. However, you can define which companies you want in your rankings by creating a new company list.
- Go to (both paths lead to the same page)
- Personal info/Company lists OR
- Comparisons/Rankings/Make your own ranking list/Create own company lists
- Name your list and select the companies you want in it
- Click Add
How to change estimates?
Instructions for changing estimates in ValuViews. You can change most of the estimate parameters and the system calculates all the other figures to correspond your changes.
Initiation of coverage
To add new company, follow the steps below:
- Go to the Web platform
- Go to Admin -> Companies & Industries -> Company management -> Add new company
- First check from the drop-down list that the company you are about to add is not already added. If you can’t find it from the list, then you have to add it.
- Check if there is existing ticker for the company from “Ticker (series I)” drop-down list
- If you do not find it from the list then you need to add one:
- Click “Add new ticker”
- Fill in all required information
- Ticker name, ISIN code, and last closing price
- Click “Add ticker”
- After that new ticker should be available (you still have to choose it from the list)
- Fill in all the company information fields
- Bloomberg, Reuters and GICS codes are not required
- Click “Add company”
- IMPORTANT: Make sure that in the Excel model you have exactly the same company name (cell F1) as the one you used while creating the company.
NOTICE, new company will be hidden until the model is uploaded to the database, after this it will be visible immediately.