I really enjoyed the article, Straddling Market Sectors, by Kate Sidorovich, IRO at eHealth, in the September’s issue of IR Update. When company operates in several different businesses, the typical analyst’s approach of finding comparable companies becomes useless or at least very challenging – Sidorovich talks about her company that is in healthcare and e-commerce. So, some analysts end up comparing them to financial institutions, some to insurance companies, and some to technology companies.
My experience of working for a multinational conglomerate was very similar. We produced submarines, tankers, nuclear reactors, off-shore and on-shore drilling rigs, excavators, motorcycles, variety of steels and other metals, and provided banking services, insurance services, real estate, and so on. Now try to find a comp for that!
And it is impossible to use one conglomerate as a comp for another – the combination of market segments they are in will also be very different!
So, I had analysts from almost any imaginable sector of the economy (plus, the emerging markets!) following us and talking to us – each with their own set of comps based on their industry. That was always a lot of fun to conduct conference calls or other investor meetings.
IR Update’s article concludes with one of the recommendations to “embrace education.” And I 100% agree. It was my job as an Investor Relations Officer to educate our investors and analysts on all our industries, products, market positions, and so on to help see the big picture of where the company is going rather than just one of our businesses.