Wondering why your company's stock trades the way it does? Looking for ways to improve the price of your stock? Market Topographer is a new product that aims to help companies diagnose what's going on with their stock by looking at 12 core factors, including financial leverage, the dividend payout ratio, historical earnings stability and expected future growth in earnings.
"It's the only thing out there like it right now to allow companies to dig in and understand their relative value," says Jonathan Greenberg, who developed the Market Topographer stock analysis platform.
Greenberg says that in his 13 years as an investment banker at Lehman Brothers and Salomon, corporate clients had two main questions: how to boost their stock price and why their valuation was weaker than that of their peers. He left Wall Street to work on technology to help answer those questions.
Market Topographer's model "measures in essence the relative value of all stocks in the market, and we're able to statistically attribute differences to exposure to different factors," Greenberg says. The company offers a report called Comps Companion that uses the multifactor analysis to benchmark the performance of a company's stock against that of its peers.
"We have 20 years of market dynamics to help companies understand the evolution of their multiple," Greenberg says. "We can go back 20 years and generate reports analyzing the difference in relative value for them or their peers vs. the group at any point over the last 20 years."
Greenberg says financial leverage is an influential factor. "It's not nearly as important as a year and a half ago, but it's still very important," he says. "Companies with higher leverage have lower valuations because it is riskier and makes their equity that much riskier."
Greenberg says Market Topographer's analysis can be helpful for investor relations groups: "It allows companies to understand better how much of the trading multiple is within their control and allows them to communicate that better to their investors." Corporate development and corporate finance teams can also use the analysis, for example if the company is considering a transaction and wants to understand how it's positioned, he says.