The Trefis Approach

THE BEGINNINGS

Trefis.com was founded by MIT Engineers and former Wall Street analysts who realized that most people do not understand the seemingly familiar companies around them. For example: Apple, Google, Coca Cola, Walmart, GE, Ford, Gap, and others.

People often come across information on companies, their products, and markets, from newspapers, online blogs, columns, and in conversations with friends but have no easy way to know what parts of a company or specific products impact the company most. For public companies, it is easy to get the company annual reports and other filings, but a chore to extract insights from those filings, and hardly fun. It is even more difficult to relate the products, technologies and markets to a company’s stock price.

You might find this experience applies to you though you may have invested money in these companies, have been working with one of them for years as an employee, or have consulted with them as an expert for a long time.

Disagree?

Consider these questions:

  • What % of Apple’s stock price is iPhones? (Q: Is it 5%, 25%, or 50%?)
  • What % of Dell’s stock price is Dell Notebooks?
  • If Bing took half the market share from Google Search, what % upside could there be for Microsoft’s stock?

Trefis helps you answer these questions, and others like them.

THE TREFIS SOLUTION

We research hundreds of facts to come up with the Trefis price estimate for each company’s stock, in order to provide you with a solid starting point.

We don’t expect to have a magic potion, or guarantee that the market price will converge to the Trefis price tomorrow, or ever. Rather, by putting a well-thought-out stake in the ground, we aim to provide you with a solid starting point so you can make better informed investment decisions.

Our models are rigorous and deep, but we believe it is equally important to make them fun and easy-to-understand. When you type in a company ticker or name, we show you in a single snapshot what product lines and divisions of a company really matter.

You can further see the underlying fundamental drivers of a product’s revenue/expense streams such as pricing, market share, and profit margins, as well as modify assumptions and test different scenarios directly from the charts. Want a second opinion? Ask questions and vet your opinions on specific forecasts with experts and friends.

HOW RELEVANT IS THE NEWS?

We found that when new information, news and trends become known in the market there is excessive qualitative discussion in the media. Amidst the chatter, it is difficult to determine whether the news or trend really matters to a company, and if so how much.

On Trefis you can easily quantify how much a recent news event or trend might impact a company’s stock. You can play with assumptions, or try scenarios relevant to recent trends.

For example, you can answer questions like:

If Microsoft Bing’s market share in search doubled over time as it took share from Google, how much would that impact Microsoft’s stock? You can simply drag the Microsoft Bing market share trend-line on a chart to see this answer

Or, Would it matter to PepsiCo’s stock if Pepsi continues to lose share in the carbonated drinks market to Coca Cola? Just modify Pepsi’s market share to find out.

DISNEY VISIT: DOES THAT IMPULSE BUY MAKE SENSE?

The Trefis platform uses extensive data to show in a single snapshot what drives the value of a company’s business. We move beyond the qualitative notion “if you love the coffee at Dunkin’ Donuts, you should think about buying the stock,” to answer quantitative questions like “If their coffee sales are up 10% next year but doughnut sales are down 5%, what happens to the value of the company?”

If you loved your recent visit to Disney resorts and are ready to go buy Disney’s stock, Trefis is a platform where you can spend 10 seconds and find out whether that impulse is justified by the fundamentals. In this case, Trefis shows you that the Parks and Resorts business is less than a a third of Disney’s stock price, and may not be the reason you want to bet on Disney’s stock.

TREFIS LIMITATIONS

We understand that multiple factors, some quantifiable, and some not so easily tackled influence a company’s stock price. The Trefis view is a very detailed fundamental model of the business, one of the most rigorous one can find in the industry, yet simple and easy-to-use. However, it is still just a model – an artificial representation of the real company, which is much more complex. By providing a transparent, interactive, and intuitive platform we hope to empower you to better make sense of companies and the businesses around you.