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ALL HELP TOPICS
Getting Started with Trefis
Navigation
Trefis Price & Analysis
Divisions
Historicals & Forecasts
Community
My Estimates & Forecasts
Finance Basics
Finance Advanced
Blogger Chart Tools
Trefis PDF Reports
Trefis Mobile & Apps
Trefis Institutional
Account Help & Cancellations

Getting Started with Trefis

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What is Trefis?
Trefis is an interactive financial community structured around trends, forecasts and insights related to some of the most popular stocks in the US.

Whereas most finance sites simply give you the facts about where a stock has been and what a company has done in the past, Trefis focuses entirely on the future. The price of a stock is determined by what will happen in the future, not what has happened in the past.

Trefis analysts spend weeks evaluating each stock that we cover and utilize commonly used valuation methodologies to determine a Trefis price for each company. We present you with not only our synthesized view but also every single step within the valuation process used to determine the Trefis price.

Structure, transparency and modifiability are our core principles. Our analysis of each company is structured by division and by forecast within each division. Our forecasts and the corresponding rationale are transparent to all and each forecast assumption that has an impact on the Trefis price is modifiable by users. The result is a community that can have meaningful conversations around structured financial information and share their views backed by analysis.

Currently Trefis covers more than 200 major stocks across technology, telecom, media, consumer, retail, automotive, financial services and energy industries and will be expanding to other industries like health care in the future.
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What can I do using Trefis?
Trefis users can:

1.View the Trefis price and analysis for a stock
2.View and modify the forecasts for any part of our analysis
3.Generate their own price estimates by modifying the Trefis analysis
4.Share their forecasts and price estimates with other Trefis users
5.Share their comments with other Trefis users
6.See the price estimates and forecasts of other Trefis users

Institutional users can also:
1. View earnings forecasts in addition to the Trefis price
2. Download the Trefis Excel model
3. Subscribe to a growing choice of leading investment research providers who provide their research coverage using Trefis interactive technology
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How do I get started?
Select a company of interest from the Trefis Homepage. Alternatively, you can always search for a company using the search bar in the upper right of the screen or select the from Companies menu at the top of each page.
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What companies are on Trefis?
Trefis has content for some of most popular companies in technology, media, telecom, consumer, retail, automotive, financial services and energy. We have plans to expand our content to include companies in other industries as well. Pharma, biotech, industrials are just some of the industries that we plan to include. We also intend to cover companies listed in non-US exchanges in the future.

Trefis Institutional Users can request access to a growing choice of other research providers who cover a wide variety of US and international stocks- large, mid and small capitalizations.

Navigation

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How do I find a company?
You can always search for a company using the search bar in the upper right of the screen. You can also see what companies are currently available from the Homepage.
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How do I find and follow friends and experts?
You can find friends and experts to see their price estimates, forecasts and comments by searching within the Find People section of the Trefis site. Find People can be accessed by clicking the Find People link at the top of the page. You can search for people by name or by company. When you search by company you get a list of people that have price estimates for that company on Trefis.


By clicking on a person's name within the Community section of a company page on Trefis, you can select to view that person's profile or choose to follow them. Currently, the Community section is limited to Trefis covered companies.
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How do I search for people that have price estimates for a specific company?
Yes, you can do this by searching by company within the Find People section or by going to the Trefis page for that company and scrolling down to the Models section on right-hand side of the page.
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How do I invite people to Trefis?
There is an invite form on the right-hand side of the Find People section.
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How do I view user profiles? How do I edit my own?
You can click on a person's name within the people search results using Find People. You can also click on a person's name within the Community section of any company page on Trefis.


You can edit your own profile by clicking on the My Info link in upper-right hand corner of the page.
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How do I view a person's model for a company?
There are multiple ways that allow you to navigate to seeing someone's model (Trefis companies only for non Institutional Users):


1 - Find People - After searching for a list of people by company within the Find People section you can select View Model for any of the people appearing in the search results


2 - People Profile - When looking at a person's profile you will be able to see a list of companies for which they have price estimates. You can select View Model for any of these companies


3 - Community Section - Within the Community section for any company on Trefis, we show you a list of people that have models for that company. You can select View Model from here
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How do I share my model with someone?
Currently your models are automatically shared with people in the Trefis community (Trefis companies only for non Institutional Users). You can invite someone to Trefis to view your model using the invite feature within Find People. You can also use the "Share model" link when viewing your model for a company to directly e-mail a link for your model, or share with your friends on Facebook, Twitter or elsewhere.
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How do I find the Trefis forecast for a specific product or service?
For most companies on Trefis the division names specify the product or service that is included within that division. In cases where the product or service that you're looking for isn't obvious from the division names, you can check the division overviews of the divisions that are most likely to include the product or service to see if we've accounted for it. The Trefis division overviews often list all of the products and services included in that segment.

Some products are popular or well-known but not significant for a company's overall value. For example, Amazon owns popular websites like IMDb, Alexa, Audible and Shelfari and all of these are combined into Amazon's Cloud & Other Web Services since their impact is small compared to Amazon's core books, DVDs, music and merchandising business. In other cases, important products are incorporated into or bundled with other products that are sold. For example, Apple's OS X operating system software is an important product that contributes to Macintosh notebook and desktop sales but has limited impact for Apple's stock as a standalone product.

Trefis Price & Analysis

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How does Trefis come up with the Trefis price?
The Trefis price is the result of mathematically combining all of our forecasts for a company into a single number representing the per share value of the company. The Trefis forecasts are used to calculate future revenues, costs and cash profits for a company. The future cash profits are then discounted to the present using commonly used valuation methodologies.

We basically estimate the fair or intrinsic value of the stock price based on its fundamental drivers, and present it to our users. When compared to market price, it tells you whether the market price is lower or higher than our estimate of the true value of the company's stock price.

Take a look at our Finance Basics help category for more information on the methodology.

For other research providers on Trefis Institutional, the analyst may provide a price target using different techniques, e.g. a Price Earnings multiple, or Discounted Cash Flow.
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What does the Trefis price include?
The Trefis price includes forecasts of a company's fundamental drivers (like pricing, units, market share), which are then factored into the Trefis price estimate for the company's stock.
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How does the Trefis price take into account a company's emerging business lines or new products?
Accounting for emerging business lines or new products is at the discretion of the Trefis team for each company. The decision whether or not to incorporate a potentially new business line is typically based on the perceived uncertainty around the existence or growth of that business line as well as the availability of reliable information to justify Trefis forecasts.

In some cases, forecasts of new products are incorporated into forecasts of existing products. For example, within our analysis for Dell we factored in a faster decline for our Notebook Pricing forecast based on the emergence of Netbooks (a new class of low-cost notebooks).

In other instances, we have deliberately chosen not to incorporate or estimate speculated new products due to the high level of uncertainty. For example, Apple could start selling other types of consumer electronics like television sets but based on the information available to use we cannot value that option with the level of confidence necessary to incorporate it into our Trefis price estimate for Apple.

In valuing emerging products, one also needs to be mindful of the potential negative or cannibalizing impact that product may have on the company. For example, suppose you were able to accurately estimate the value of Apple's iPhone product in 2006 (long before the mid-2007 launch) but you missed the cannibalizing impact of the iPhone on iPod sales. Although your value of Apple's iPhone option would be accurate, your overall Apple valuation would be overstated.

If we think about how Trefis would likely have valued Apple in late 2006 / early 2007, we certainly would have incorporated an initial estimate of the iPhone business after the iPhone was announced in January 2007 (six months before iPhone sales began); however, depending on the level of information available before the official announcement, we may not have estimated that business in late 2006. Was January of 2007 too late to value the iPhone business? Was it already priced into the stock at that point? If we look at Apple's stock history, Apple traded between $85-$95 in January 2007 and appreciated to nearly $200 by the end of 2007. The level of appreciation is consistent with our estimate that iPhone constitutes about 50% of Apple's value which suggests that the bulk of iPhone's value had not been incorporated at announcement despite months of speculation. This simple analysis is certainly not perfect since other factors may have impacted Apple's stock but we've implicitly assumed that the iPhone was the most significant event for Apple's stock during that time period. The analysis does provide some perspective on how much investors factor uncertain future products into their stock assessments.

Despite Trefis's approach to new businesses and products, if you feel strongly that the a particular company has additional value associated with it due to a business line or product that isn't currently captured in the Trefis analysis, then you can easily use the Trefis analysis to see whether that additional value is meaningful to the stock. For example, a new business line valued at $1 billion would be very significant for Akamai (Trefis market cap of $4 billion) but less so for IBM (Trefis market cap of $200 billion). At this time, we do not allow Trefis users to create "generic" or "stub" divisions to incorporate such values directly into their prices since the absence of this feature ensures greater comparability of user prices across the Trefis community.
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How does the Trefis price take into account the value of company brands and management experience?
Company intangibles such as brand, process know-how and management experience have an impact on the ability of a company to operate effectively and to realize its strategic goals. Such intangibles are not valued separately from the company's actual business but are implicitly valued when investors make judgments about the likelihood of a company fulfilling a forecast.

For example, when Steve Jobs (CEO of Apple at the time) announced in 2007 at the unveiling of the iPhone that Apple would sell 10 million iPhones by the end of 2008 many investors believed him. This was evidenced by Wall Street analyst models forecasting between 8 and 12 million iPhones sold by 2008 and by the stock rising 100% over the next 6 months. Why did so many people believe Apple could do it? Would you have believed any company or any CEO making such a claim? Investor belief had to do with the fact that Apple has experience launching successful consumer products such as the iPod (this is process know-how), they have massive brand awareness and they have capable management.

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How does Trefis factor in the importance of management for its estimates?
Company leaders are responsible for the process by which companies envision, design and launch successful products. Factoring in their significance to a company's value is a matter of forecasting how the company's fundamentals will improve or deteriorate under their guidance.

For example, the future of Apple in a world without Steve Jobs is frequently discussed. The immediate impact on Apple's stock of Steve Jobs's resignation as CEO was small. The long-term impact will be based on how Steve Jobs' absence translates to weaker growth in iPhone market share, iPhone margins or a number of other fundamentals related to Apple's businesses.

We expect and encourage our users to freely express their view about these fundamental drivers by (i) directly modifying the forecast for these drivers on the chart itself, and (ii) explaining their thinking about what parameters (for example Steve Jobs's absence) they think could impact these fundamental drivers.
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Is the Trefis price estimate a target price? What is the time frame for the estimate?
Trefis does not provide a target price. Instead we estimate what we believe is the intrinsic value of a company's present stock price and guide the user to what really matters for the company. You can use the Trefis tools to modify our analysis based on your own views. You can compare your view with the Trefis analysis or with that of other people in the Trefis community. A large difference between the Trefis Price and the market price means that in our estimate of the intrinsic value, we have found the market to have mispriced the company.

It is important to note that there are no guarantees that the market price should converge to the Trefis price estimate right away or ever at all. The Trefis view is a very detailed fundamental model of the business, one of the most rigorous one can find in the industry. However, it is still just a model - an attempted representation of the real company, which is much more complex.

For other research providers on Trefis Institutional, the analyst may provide a target price and a time frame.
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Does Trefis have access to non-public company information?
No. The Trefis analysis is based on publicly available company information from financial reports, press releases, company presentations and other materials. Additionally, we use public information from third-parties such as news providers, market researchers, bloggers and product experts. Our forecasts are based on our own analysis of the publicly available information that we gather. Trefis does not have any non-disclosure agreements with the companies that it covers.

This is also the case with Wall Street equity research and hedge fund analysts who rely on publicly available information. The SEC's Regulation Fair Disclosure (Reg FD) mandates that publicly traded companies disclose material information to all investors at the same time.

Wikipedia: Regulation Fair Disclosure
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How often does Trefis update its analysis and content?
There are three separate types of Trefis analysis and content:
1 - The models (historical data, forecasts)
2 - Evergreen content associated with the models (rationales, overviews)
3 - Latest updates as articles written on companies

We update the models at least every quarter when earnings are announced and we update some of the evergreen content (rationales, overviews) associated with that company during that time. We also update whenever there is a meaningful event (merger, acquisition, divestiture, new product launch).

Our latest views on any company can be found as articles we regularly publish. You can see our articles here and can filter by the companies listed in the right hand area.

Analysts at other research providers on Trefis Institutional update their analyses and content on a schedule that they determine.
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Is Trefis compensated by the companies it covers?
Trefis does not accept compensation from companies to build their coverage and does not provide any trading or investment banking services.
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Does Trefis or its employees hold positions in the companies covered?
Trefis does not trade or invest in any of the companies that it covers. Trefis employees may hold positions in some or all of the stocks covered by Trefis although this is generally not common. Relevant holdings are disclosed on Trefis.com if the holding is by an analyst involved in covering the company.

Divisions

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What does the word "division" mean?
Trefis uses the term "division" to refer to a part of the company split as shown on the initial company page for any stock viewed on Trefis. The divisions shown by Trefis do not necessarily correspond to a company's external or internal reporting structure. Trefis decides on how to segment a company by division based on a number of factors including the availability of division specific information, the importance of certain divisions and the overall company understanding communicated to viewers.

Other research providers on Trefis Institutional determine how to split the company into divisions or segments. Trefis does not influence this decision.
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What does the company split by division represent?
The company split by division represents the value that each division contributes to the total value of the company or, in other words, the percentage of the Trefis price that comes from that division. The split does not represent divisional revenues, costs or profits nor does it necessarily correlate to the relative size of current or historical divisional revenues, costs or profits. The reason for this is that value is driven by future performance, not current or historical performance. Take a look at our Finance Basics help page for more on the basics of valuation.
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How do you estimate the value of a particular company division?
The way we determine the value of specific division is generally as follows:
  1. Determine the divisional breakdown we want to pursue for a company
  2. Determine the revenue and direct cost lines for each division
  3. Identify and forecast drivers for each division's revenue and direct cost lines
  4. Forecast corporate expenses and company-wide indirect cash flow items (like CapEx, changes in net working capital)
  5. Allocate corporate expenses and company-wide indirect cash flow items back to each division pro rata based either on divisional revenues, gross profits or operating margins. Choosing which one is a judgment call based on the type of business and whether or not the results accurately reflect the value being created (or destroyed) by that business
  6. Discount the divisional free cash flows (which are after the allocation of indirect items) to determine the value of the division

For more details on our methodology and discounted cash flow (DCF) valuation, please see the Trefis Price & Analysis and Finance Basics section of our FAQ.
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Can the Trefis value for a division be considered the real value of that division?
Since there is no liquid market for the value of business divisions of publicly traded companies it is not easy to prove that the Trefis divisions are "real" values. However, there have been multiple instances in which companies covered by Trefis have spun out or sold off business lines and in many of those cases the value for that business line that is implied based on our analysis has been close to the price paid by the acquirer of the business.

Historicals & Forecasts

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What does the word "forecast" mean?
Trefis uses the term "forecast" to refer to an individual driver of value for the company's price estimate. A forecast is used as a factor in calculating the future revenues or costs for the company and therefore impacts the calculated company price estimate.
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Where does Trefis get the historical numbers used in forecasts?
Whenever available we take figures provided by the company through their financial filings, press releases, investor presentations or other publicly available information. In many cases, we use historical numbers publicly available by third-party sources or by triangulating figures using available information and reasonable assumptions based on our understanding of a business. For each forecast, we have section called "How we got historical data" which explains how the historical data for that particular forecast was attained.

Historical numbers in forecasts from other research providers on Trefis Institutional are provided by them. Trefis does not verify these numbers.
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How does Trefis come up with its projected forecasts?
The Trefis team spends weeks evaluating each stock covered. The team begins by identifying how the different divisions within a company make money and by selecting the drivers of value that are most relevant for each division. For each driver of value, analysts come up with a Trefis forecast based on a combination of historical trends, understanding of competitive and industry dynamics, and identification of future trends that are likely to impact that driver. In some cases, historical information may be inexact or unavailable which requires the Trefis team to make educated guesses based on indirect information. Our forecasts represent Trefis assumptions about the future backed by our rationale and provided transparently to all users.

Analysts from other research providers on Trefis Institutional do their own research to come up with their forecasts. Trefis does not attempt to review these forecasts.
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How does Trefis determine the impact of a forecast on the price estimate?
Each Trefis forecast is mathematically related to either future Revenues or future Costs. When a user makes a change to Trefis forecast, the Trefis platform recalculates the implied Revenues, Costs and Cash Profits for the company in the future. Some forecasts have a greater influence on the overall profitability of the company in the future than others and such differences are communicated to users based on how sensitive the Trefis price is to a particular forecast.
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How can I access the discount rate or WACC used by Trefis?
You can access the discount rate for any company on our site by navigating to our analysis for that company, selecting a division and then selecting the "P&L" tab above the forecast chart shown. Then, within the right-hand P&L window, scroll down to the bottom to select the "Edit DCF" link. You should see our discount rate and terminal growth estimates for the particular division that you're viewing.

Community

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What is the Trefis community?
The Trefis community consists of Trefis team members, expert users and regular users, and is currently limited to Trefis covered companies.
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Who are expert users and how can I become one?
Expert users are those members of the Trefis community that have above average knowledge of a particular company, industry or market. Some expert users are employees or former employees of companies that we cover while others are industry consultants, research analysts, prominent bloggers or employees of suppliers or customers for covered companies.

If you wish to be identified as an expert please email us at help@trefis.com.
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What is the community average price and how is it determined?
The community average price represents the price calculated using the weighted average of all user forecasts for a particular company. The weighting of a forecast is based on the reputation of the user who created it as well as the rating of the comment associated with that specific forecast. User reputations are based on their comment histories including how those comments were rated by other community members.
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Why are users only allowed to comment on forecasts and not the company overall?
We strongly believe that meaningful conversations come from structured conversations. Our goal is not to be the finance site with the most comments but rather the finance site with the most meaning and insights. Therefore we demand that users think about what part of a company their comment is related to before they post. In thinking about it, you may realize that your comment is not relevant to the value of the stock or that it's related to a less important part of the company. We believe that all community members will benefit from the categorization and emphasis that is natural within the structure we've created.

My Estimates & Forecasts

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Does Trefis save my forecast and price estimate?
Trefis saves the modified forecasts and price estimates of registered users that are signed in.
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How can I delete or reset my price estimate for a company?
The easiest way to delete or reset your price estimate is to navigate to the main company page for the price estimate you wish to reset and then delete your version of the price estimate.

For example, if you want to reset your Google price estimate to the Trefis price estimate for Google, you can navigate to Google, hover over the text that says "John's model" on the left-hand side where your price estimate is shown and click the X that appears on hover over.

Alternatively, if you only want to reset specific forecasts within your existing price estimate for a company, you can navigate to those forecast charts and click-on the Reset link shown in the chart.

We recommend deleting any price estimates that you're not interested in saving or were not serious in coming up with forecasts. This will help us to retain only those community price estimates that are the highest quality.
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How can I delete or reset specific forecasts for a company?
To reset specific forecasts within your existing price estimate for a company, navigate to those forecast charts and click-on the Reset link shown in the chart.

Finance Basics

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What is Discounted Cash Flow (DCF) analysis?
Discounted Cash Flow (DCF) analysis is a valuation methodology that involves forecasting future free cash flows for a company and then discounting those free cash flows to the present using a discount rate. Discounting is necessary to account for the risks associated with investing in a particular company as well as the time value of money which can be summarized as "a $1 today is worth more than a $1 tomorrow". The future free cash flows are commonly calculated by projecting key line items such as Revenue, Direct Cost and Indirect Cost.
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How does Trefis use DCF analysis?
In order to project the Revenue, Direct Cost and Indirect Cost line items necessary to determine future free cash flows for use in DCF analysis, the Trefis team comes up with forecasts for each of the essential drivers of value for the divisions of a company. See "How does Trefis come up with its forecasts?" for more on our forecasts.

Trefis forecasts seven years into the future and applies a terminal growth rate to each division's cash profits in year seven to determine the value coming from the remaining years. See Advanced within the Finance help section for more details.
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Who else uses DCF analysis?
DCF analysis is commonly used by Wall Street investment banks, equity research firms, institutional investors, hedge funds and consultants.

Analysts at other research providers on Trefis Institutional may use DCF in determining fair value or target price, or they may use another approach such as a multiple of earnings or cash flow.
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How is DCF different from relative or multiples valuation? Why does Trefis do only DCF valuation?
Relative or multiples based valuation involves applying a multiple to a company metric such as next year's forecasted Revenue, EBITDA or EPS to determine its enterprise value. For example, in multiples analysis, a company that is expected to have a 2009 EV/Revenue multiple of 1.5x and 2009 full year Revenue of $1 billion is expected to have an enterprise value (EV) of $1.5 billion (1.5 x $1 billion). One can carry out similar multiples based analysis using an EBITDA multiple (EV/EBITDA) or EPS multiple (P/E).

The challenge, however, is in selecting the appropriate multiple to apply and this is why multiples analysis is also referred to as 'relative' valuation since the prevalent method is to look at the multiples of competitors or comparables. If you're trying to figure out what EV/Revenue multiple is appropriate for Coca-Cola, you would look at Pepsi's EV/Revenue multiple. Therefore your valuation is typically relative to the valuations of its competitors or comparables. However, what if the entire sector is overvalued or undervalued? If all the valuation metrics of comparable companies for the company you're trying to value are all inflated, then your valuation will also be inflated.

Multiples based valuation is a short-hand form for valuation and shouldn't be interpreted as a substitute for deeper analysis. Comparing Coca-Cola's EV/Revenue multiple to Pepsi's takes less than one minute. The understanding behind what drives changes in Coca-Cola's market share relative to Pepsi and quantifying the impact on the stock price is what Trefis is about.
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Where can I learn more about the valuation methods used by Trefis?
Depending on your time, ambition and interest, there are a few different paths to greater knowledge:

1 - Trefis Advanced Finance help for answers to a few deeper questions related to DCF
2 - Wikipedia: Discounted Cash Flow
3 - Wikipedia: Time Value of Money
4 - Wikipedia: Weighted Average Cost of Capital
5 - Website of Professor Aswath Damodaran, Stern School of Business at NYU
6 - Valuation: Measuring and Managing the Value of Companies

Finance Advanced

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How does Trefis determine the discount rate for a company?
For some companies, Trefis uses the weighted average cost of capital (WACC) figure from Bloomberg as the company discount rate. In other cases, we use a WACC figure that we've calculated. Please see the rationale associated with a company division's discount rate to better understand the source of that specific discount rate.
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How does Trefis determine the terminal growth rate for a company?
Trefis terminal growth rates are division specific for each company. In most cases we choose a terminal growth rate between 1% and 4% based on our beliefs around the division's long term performance.
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Why do Trefis's divisions for a company not match how the company reports?
Trefis decides on how to segment a company by division based on a number of factors including the availability of division specific information, the importance of certain divisions and the overall company understanding communicated to viewers. Oftentimes companies do not report to the level of granularity that we feel is necessary to understand a business which is why we often have more segmentation in our analysis than what is shown in a company's own financial filings.
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Why are Trefis historicals for a company different in some cases than what is reported?
1 - Calendarization Trefis calendarizes the historical financials of companies that have non-December fiscal year ends. Calendarization involves adjusting the fiscal year financials of a company using quarterly information such the result approximates the financial performance of the company over a calendar year. Companies that have near December fiscal year ends (e.g. November or January) are not calendarized and treated as calendar year figures. Calendarization is important because it allows us to do cross company comparisons for companies that have differing fiscal year ends


2 - Pro Forma Acquisition Trefis may use pro forma historicals to account for acquisitions a company has made recently. This means that a new acquisition that is effective as of this year will be shown as if the company owned that asset in previous years


3 - Minority Interests and Ownership Accounting Trefis accounts for ownership stakes differently than US GAAP accounting. In US GAAP accounting a company will consolidate the financials of a subsidiary if it owns a 50% or greater stake in the subsidiary. This means top line financials (revenues and costs) show 100% of that subsidiary's revenues and costs attributed to the consolidating parent. The company then allocates an after-tax minority interest to account for the part of the subsidiary that it does not own. Trefis, however, shows the revenues and costs at an ownership adjusted level. If the company owns 80% of the subsidiary, we only show 80% of that subsidiary's revenues


4 - Timing Differences in Revenue Recognition Accounting practices in the US dictate that certain types of revenue are recognized over a period of time that may extend beyond a year. This is common amongst subscription services or products that include subscription service components. In such cases, Trefis may show higher reported historical revenues than what the company reports since Trefis is focused on the cash received rather than how that cash is recognized for tax or accounting purposes


5 - Revision of Historicals Occasionally companies revise their historical figures based on new information, new accounting standards or reorganizations of reporting segments. Trefis typically uses the most recently reported information regarding the figures for any historical year. A discrepancy between Trefis historicals and the company actuals that you are comparing to may be due to this difference in revision of historicals.

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Why can't I see quarterly Trefis forecasts?
Trefis currently does not provide quarterly breakdown of historicals or forecasts.

Analysts at other research providers on Trefis Institutional may provide quarterly forecasts or other relevant time periods as they see fit.
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Where are the Trefis EPS forecasts for a company?
Earnings per Share (EPS) forecasts are provided only to Institutional subscribers. For other users, Trefis is focused on the free cash flow a company generates for valuation purposes and not US GAAP EPS.
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Besides changing Trefis forecasts, can I change the structure of the valuation for a company?
At this time, we do not allow users to modify the overall structure of a company. Not allowing this makes it easier to compare the price estimates of different users.
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How does Trefis account for employee stock options?
We use the Treasury Stock Method to account for dilution from stock options based on the option count and weighted-average price reported by tranche in the company's annual or quarterly filings. We exclude non-cash stock-based compensation from the calculation of divisional free cash flows.

Investopedia: Treasury Stock Method
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How does the Trefis valuation account for investments and non-operating assets / liabilities?
In most cases we include investments and net non-operating assets within our Cash Minus Debt calculations. In some cases we show the investments as a separate division due to their significance (e.g. investments in Yahoo Japan and Ali Baba are shown as Strategic Investments for Yahoo).
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How does Trefis allocate corporate-level costs and operating investments to each division?
We typically allocate indirect costs / investments (like corporate SG&A and corporate Capital Expenditures) to each division pro rata based on that division's gross profits or EBITDA. In some cases the allocations are based on divisional revenues. We also make occasional exceptions when we believe that such an allocation does not make sense. For example, if a company has three unrelated divisions of which only one is the primary beneficiary of the company's Capital Expenditures then we will adjust the allocation accordingly.
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How does Trefis account for inflation, consumer confidence, unemployment and Fed rate adjustments?
Trefis price estimates factor in inflation and fed-adjustments through our discount rate which is the company's weighted-average cost of capital (WACC). Briefly, the WACC factors in the company's cost of equity which is based on a long-term risk-free rate that captures inflation and the long-term effect of Fed adjustments.

You can access the discount rate for any company on our site by navigating to our analysis for that company, selecting a division and then selecting the "P&L" tab above the forecast chart shown. Then, within the right-hand P&L window, scroll down to the bottom to select the "Edit DCF" link. You should see our discount rate and terminal growth estimates for the particular division that you're viewing.

Consumer confidence and unemployment are taken as factors into our forecasts where appropriate. For example, we forecast lower growth in Notebook PC sold in 2009 compared to prior years due in part to weak consumer confidence as a result of macroeconomic uncertainty. Unemployment has a more direct impact for our forecasts for payroll processors such as ADP and Paychex.
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Do Trefis forecasts account for elasticity between forecast variables?
No, Trefis forecasts do not account for elasticity between variables.

What does this mean?

Elasticity refers to how a change in one variable (e.g. product pricing) impacts another variable (e.g. product market share). Trefis does not automatically factor in elasticity when you change a variable.

Why doesn't Trefis account for elasticity?

We've deliberately chosen not to make forecasts interdependent - e.g. adjustments to pricing automatically leading to changes in market share. The primary reason for doing so was to make the behavior of our analysis more understandable and predictable for users that may not be expecting forecast inter-dependencies. As it stands, it's up to the user to judge whether pricing decreases will lead to market share increases and what the elasticity is between the two variables. It could also be that pricing decreases by a company are matched by competitors leading to, all other things being equal, no market share movement but changes in the overall market demand instead. You are encouraged to consider such possibilities when modifying Trefis forecasts.

Trefis analysts do consider elasticity as a qualitative factor that influences how we forecast.
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What is the equation used by Trefis for determining terminal value?
We calculate the terminal value for each division of a company separately. For each division, we use the following equation:

Divisional Terminal Value = [ (Divisional Free Cash Flow in Last Forecast Year) x (1 + Terminal Growth Rate) ] / [ Discount Rate - Terminal Growth Rate ]
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Is the terminal growth rate selected by Trefis nominal or real?
Our terminal growth rates are intended to be nominal (e.g. includes inflation) rather than real.
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What is the enterprise DCF model?
As we've discussed previously, Trefis uses a discounted cash flow (DCF) valuation methodology to determine the value of a company. This begs the question, which cash flows do you discount? The Enterprise DCF model refers to the approach in which we value the cash flows that the firm generates that are available to both the equity and debt holders of the company. In other words, we look at what cash flows the company would generate if it had no interest expenses (which represent cash flows to debt holders) and value the company based on those cash flows. This value is called the enterprise value of the firm.

We then take into account the impact that debt has on the value of the firm by (i) factoring in the impact of debt on the discount rate via the weighted-average cost of capital (ii) by subtracting the current debt (and debt-like obligations) of the firm from the enterprise value of the firm that we've calculated. By subtracting the debt from the enterprise value, we're left with the value of the firm available to equity holders.
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What is the dividend discount model?
The dividend discount methodology (DDM) refers to a valuation approach that differs slightly from the enterprise DCF methodology (described here) in that we value the potential cash flows available to equity holders as dividends directly instead of valuing the cash flows available to both equity and debt holders first.

In practice, this means that we determine the net income that the company is likely to generate over our forecast period and apply a potential dividend payout rate to determine what dividends could potentially be paid to equity holders. We then discount these dividends to the present using a discount rate at the cost of equity and the sum total of our discounted dividends is the equity value of the company. It's important to note that the potential dividends that we're forecasting do not necessarily need to conform with the actual dividends paid by the company.

Trefis typically uses the DDM approach in valuing banks and insurance companies where interest expenses are a large part of the company's operating expenses. In the typical enterprise DCF approach, we ignore interest expenses to value of the firm independent of capital structure and use a weighted-average cost of capital that factors in debt. We also subtract the total debt obligations of the company from the enterprise DCF value to determine the equity value of the company. Banks have multiple sources of financing (customer deposits, debt and equity) that they use to make loans. Consequently, it's difficult to determine what part of the interest expense associated with the bank's debt is applicable to the loans made. By using DDM, we avoid the need to make this judgment.
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Why is a company's net cash or net debt shown to be zero in the dividend discount methodology?
Please see our explanation of the dividend discount methodology (DDM) for additional background. Since we are valuing cash flows to equity holders in the DDM approach, the resulting total value that we get is the value to equity holders (effectively the Trefis market cap for the company). We don't need to adjust based on net cash or net debt the way we do for the enterprise DCF approach. You can read more about our enterprise DCF approach here.
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Does Trefis use a fully diluted share count in calculating price per share?
Trefis calculates fully diluted share counts at its discretion when it believes that the option dilution will be meaningful. For most companies, Trefis uses the basic share count in calculating price per share.

Fully diluted share counts are most often used with technology companies where stock based compensation leads to a significant option pool of potential shares that need to be factored into the price per share.

In determining the dilution, Trefis uses the Treasury Stock Method to account for dilution from stock options based on the option count and weighted-average price reported by tranche in the company's annual or quarterly filings.
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When using fully diluted share counts, is the company's market cap also based on the diluted share counts?
When Trefis uses a fully diluted share count to determine the Trefis price per share this same fully diluted share count is used to calculate the market cap for the company based on the market price. Consequently, the Trefis market cap for a company may not match the market cap shown for that company on Google Finance or Yahoo Finance since these market caps are based on basic share counts only.

Blogger Chart Tools

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How can Trefis help bloggers and journalists?
Trefis can help enrich your blog content with engaging, easy to embed, data and analysis.

For example, if you are writing about Apple's iPhones and wondering what the impact could be on Apple's stock if 20% of mobile phones sold turn out to be iPhones, you can easily incorporate the modifiable Trefis chart showing the forecast for Apple's mobile phone market share and its impact on Apple's stock.

Your readers will be able to drag the iPhone market share trend-line to try different "what-if" scenarios and see the impact of their forecasts on Apple's stock.
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How can I embed Trefis charts in my blog?
There are currently two easy ways to embed Trefis charts in your own content (Trefis covered companies only):

Option 1: Copy the Trefis Chart Widget Code into Your Blog

For an example of how this works, see the first widget on the Trefis Chart Widgets Page.

Option 2: Install the Trefis Wordpress Plugin

If you use Wordpress to publish your content, you can easily setup the For an example of how this works, see the first widget on the Trefis Wordpress Plugin. This plugin will add a Trefis button to your Wordpress toolbar that allows you to quickly insert any Trefis chart.
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How can I embed my own forecast using Trefis charts?
Embedding your own forecasts using Trefis charts is simple (Trefis covered companies only). See how within the Your Forecasts Widget section of the Trefis Chart Widgets Page.

Trefis PDF Reports

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Does Trefis offer printable, PDF versions of its company analysis?
Yes, it's currently selectively available for only some companies, but we're working on making this available for all companies.

For example, if you're a Trefis Pro subscriber you can download our PDF report for Apple by going to our Apple page and then clicking on "Download Research Report" button below the breakdown that we show for Apple. Even if you're not signed up for Trefis Pro, you can download a sample report by clicking on this button.

Other research providers on Trefis Institutional may provide the ability to download PDF reports to specific users.

Trefis Mobile & Apps

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Does Trefis have a downloadable app for my iPhone, iPad or other mobile device?
Trefis does not provide its own mobile app at this time. We do plan to offer this in the future.

Trefis Institutional

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Does Trefis offer institution wide subscriptions or other institutional products?
Yes, Trefis offers an Institutional service which offers professionals the ability to see analyses and content from other leading research providers in the same interactive experience as for Trefis covered companies.

The Institutional service offers the following:

- A growing choice of leading research providers covering US and international stocks, ranging from large, mid, small and micro-cap companies. If there is a research provider you would like us to offer, please email your suggestion to bizdev@trefis.com

- Trefis Earnings forecasts

- Download Trefis Excel models, and in some cases from other research providers


You need to request access from each provider who will review the request, and determine whether to enable access. You must use a work email address in registering, as these providers will not consider email addresses such as Gmail, Yahoo!, etc.

Please contact bizdev@trefis.com for additional details.

Account Help & Cancellations

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How do I update my registration information?
You can edit your registration information by selecting My Info at the top of the page.
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How do I change my password?
You can change your password by selecting My Info at the top of the page and selecting the Account tab at the top of the pop-up.
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How do I cancel my subscription?
You can cancel your subscription at any time. The quickest way to cancel your subscription is through here. If you have trouble canceling, please e-mail help@trefis.com.
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How do I close my account?
Please e-mail us at help@trefis.com.
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How do I change my preferences for receiving e-mails from Trefis?
You can change your e-mail preferences by clicking on My Info at the top of the page and selecting the Account tab at the top of the pop-up.

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