Cross-Sectional Analysis

What is a 'Cross-Sectional Analysis'

A cross-sectional analysis is a type of analysis an investor, analyst or portfolio manager may conduct on a company in relation to that company's industry or industry peers. The analysis compares one company against the industry it operates within, or directly against certain competitors within the same industry, in an attempt to discover the best of the breed.

BREAKING DOWN 'Cross-Sectional Analysis'

When conducting a cross-sectional analysis, the analyst seeks to identify, by using comparative metrics, the valuation, debt-load, future outlook and/or operational efficiency of the target company. This allows the analyst to evaluate the target company's efficiency in these areas, and to make the best investment choice among a group of competitors or the industry as a whole.

When comparing the target firm to competitors, the analyst must be careful to consider the unique operating characteristics of each company and how that will affect any comparative metrics used.

RELATED TERMS
  1. Comparable Company Analysis - CCA

    A process used to evaluate the value of a company using the metrics ...
  2. Best Of Breed

    A stock that represents the most optimal investment choice for ...
  3. Stock Analysis

    Stock analysis is a term that refers to the evaluation of a particular ...
  4. Growth Industry

    A sector of the economy experiencing a higher-than-average growth ...
  5. Horizontal Analysis

    A procedure in fundamental analysis in which an analyst compares ...
  6. Emerging Industry

    A group of companies in a line of business formed around a new ...
Related Articles
  1. Trading

    Peer Comparison Uncovers Undervalued Stocks

    Learn how to put one of the top equity analysis tools to work for you.
  2. Insights

    What is Comparable Company Analysis?

    Investors that use comparable company analysis to evaluate companies compare the metrics of similar businesses operating in the same industry.
  3. Markets

    Great Company Or Growing Industry?

    Look at the big picture when choosing a company - what you see may really be a stage in its industry's growth.
  4. Investing

    Sizing Up A Career As A Ratings Analyst

    This competitive field is lucrative, but do you have what it takes to score this job?
  5. Investing

    4 Tips to Evaluate Growth Companies (KO, AAPL)

    Discover the best metrics for stock investors to utilize when selecting and evaluating the best opportunities in growth investing.
  6. Markets

    Explaining Industry

    The term industry refers to a classification of companies that share similar business activities.
  7. Investing

    Become Your Own Stock Analyst

    Learn how to do your own stock analysis and become a wiser investor.
  8. Investing

    Analyzing a Company's Investor Relations

    Read about the ways that investors can use a company's investor relations to analyze the company more deeply than other types of research would allow.
  9. Investing

    Relative Valuation Of Stocks Can Be A Trap

    This method of valuing a company can make it look like a bargain when it is not.
  10. Markets

    Explaining Price Targets

    A price target is what an investment analyst projects a security’s future price to be.
RELATED FAQS
  1. What price metrics can be used to compare companies in the industrial sector?

    Discover some of the best equity evaluation measures that investors and analysts commonly use for comparing companies in ... Read Answer >>
  2. What is the difference between CI (competitive intelligence) and competitive analysis?

    Understand the difference between competitive intelligence and competitive analysis. Learn why a company conducts both types ... Read Answer >>
  3. How can I tell whether a particular small cap stock has a positive investment outlook?

    Find out how investors assess small-cap stock outlook. Understand what determines future operating performance and what price ... Read Answer >>
  4. How does market share affect a company's stock performance?

    Discover how market share affects a company's performance. Market share is important in cyclical industries and not important ... Read Answer >>
  5. What metrics are most commonly used to evaluate companies in the electronics sector?

    Learn what metrics are most commonly used to evaluate companies in the electronics sector and the specific qualities of each ... Read Answer >>
  6. What information should I look at on a publicly traded company for use in fundamental ...

    Learn what information is important in fundamental analysis of a publicly traded company and how to use it to assess the ... Read Answer >>
Hot Definitions
  1. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  2. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  3. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  4. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  5. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
  6. Weighted Average Life - WAL

    The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding. Once calculated, ...
Trading Center