Comparable Company Analysis (CCA) in 2025: A Practical Guide for Australian Investors

Want to know if a stock is undervalued or overpriced in today’s volatile market? Comparable Company Analysis (CCA) is the go-to tool for investors, analysts, and business owners seeking a reliable way to benchmark companies and spot real value opportunities. As we move through 2025—with ASX sectors shifting and regulatory updates rolling in—mastering CCA can give you a decisive edge.

What is Comparable Company Analysis (CCA)?

Comparable Company Analysis, often called ‘comps’, is a valuation method that compares a target company to similar, publicly traded businesses. By examining financial ratios—like price-to-earnings (P/E), EV/EBITDA, and price-to-book—CCA estimates what a fair market value might be for the target. It’s a cornerstone of investment banking, corporate finance, and private equity, but it’s also a powerful tool for everyday investors sizing up ASX shares.

CCA’s main appeal is its simplicity and market relevance. Rather than relying on future projections, it uses real market data from peer companies. In 2025, as global economic conditions and Australian regulatory frameworks continue to evolve, CCA remains a robust method for cutting through market noise.

How CCA Works: A Step-by-Step Breakdown

Let’s break down the CCA process for Australian investors:

• 1. Identify Comparable Companies: Select firms in the same sector, similar in size, growth profile, and geographic exposure. For example, valuing WiseTech Global (WTC)? You’d look at logistics software peers like Altium (ALU) or even global comparables listed in the US or Europe.

• 2. Collect Financial Metrics: Gather up-to-date data—P/E, EV/EBITDA, revenue multiples, and other ratios—from financial statements and market sources. In 2025, ASX-listed companies must comply with updated ASIC reporting standards, making disclosures more consistent and transparent for comps analysis.

• 3. Normalise Data: Adjust for one-offs, accounting differences, or major events (e.g. a large acquisition or pandemic-related impact) to ensure apples-to-apples comparisons.

• 4. Calculate Valuation Ranges: Apply the median or mean multiples from your comp set to your target company’s metrics. For instance, if the median EV/EBITDA for logistics tech is 18x, and your target’s EBITDA is $50 million, you’d estimate an enterprise value of $900 million.

• 5. Make Adjustments for Market Sentiment: In 2025, sectors like renewables and AI tech are enjoying premium valuations, while discretionary retail may be under pressure from changing consumer trends and RBA interest rate policy. Always overlay qualitative factors on your final assessment.

CCA in the 2025 Australian Market: What’s Changed?

Australian equity markets have seen notable shifts since 2024, especially with the RBA’s tightening cycle and new ESG disclosure mandates. Here’s what’s new for CCA practitioners:

• Stricter ESG Reporting: From July 2025, all ASX 200 companies must disclose Scope 3 emissions and climate risk scenarios. These factors are increasingly influencing valuations—energy stocks, for example, are now sorted into ‘transition leaders’ and ‘laggards’ by major funds, affecting which comps you choose and how you weigh them.

• Sector Rotation and Macro Shocks: The ongoing pivot towards tech and green infrastructure means that traditional comps may no longer be the most relevant. For example, infrastructure investors now consider battery storage firms as peers to old-guard utilities.

• Access to Real-Time Data: Platforms like ASX DataSphere and Morningstar Direct have made it easier than ever for retail investors to pull live valuation multiples, ensuring your comps are current and accurate.

Real-World Example: CCA in Action

Suppose you’re considering an investment in Pilbara Minerals (PLS), a major ASX-listed lithium producer. Here’s how you might run a CCA in 2025:

• Step 1: Identify comps—think Allkem (AKE), Liontown Resources (LTR), and international players like Albemarle.

• Step 2: Pull current EV/EBITDA and P/E ratios from ASX filings and global data feeds.

• Step 3: Normalise for Pilbara’s recent expansion project, which temporarily depressed margins but is set to drive future growth.

• Step 4: Apply median multiples to Pilbara’s forward EBITDA, giving a value range. If Pilbara is trading below this band, you might have found a bargain—if above, it’s time to dig deeper or pass.

• Step 5: Factor in macro trends—lithium demand, regulatory changes, and investor sentiment towards critical minerals in Australia.

Tips for Making the Most of CCA

• Keep your comps fresh: The right peer group today might not be right next quarter. Sectors evolve fast—especially in tech and resources.

• Don’t skip adjustments: Normalising for one-off events or accounting quirks is crucial for accuracy.

• Use CCA alongside other methods: Combine with Discounted Cash Flow (DCF) or precedent transactions for a fuller picture, especially for takeover targets or volatile sectors.

• Watch regulatory updates: New ASIC and ASX rules can change reporting standards, impacting your data set.

Conclusion

Comparable Company Analysis is more than a spreadsheet exercise—it’s a dynamic approach that helps investors cut through market noise, especially in a shifting 2025 landscape. With fresh data, evolving regulations, and new sector paradigms, mastering CCA gives you the clarity and confidence to make sharper investment decisions. Ready to take your equity analysis to the next level?