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Data and Analytics: A New Driver of Performance and Valuation
D&A: A new driver of performance and valuation
Investors and equity analysts believe D&A will have a substantive – and often dramatic – impact on the companies and sectors they cover.
How you use D&A can impact the way equity investors and analysts view your organization. Find out what the analysts and investors are thinking.
Investors and equity analysts believe data and analytics will have a substantive and often dramatic impact in the next several years on the companies and sectors they cover. D&A will alter the competitive landscape—rewarding some companies and punishing others— especially in the longer term. “Across all industries, there’s no escaping it,” says a buy sider focused on the technology industry. In response, investors and analysts anticipate that companies’ strategic use of data and analytics will play a greater role in both investment decision making and valuation.
The topline findings of this study, based on input from more than 250 investors and sell-side analysts and developed in conjunction with Institutional Investor Research, include the following:
Data and analytics will reshape industries
- The use of data and analytics by issuers (publicly traded companies) has already begun to alter the competitive dynamics of nearly all industries, and this impact is expected to increase dramatically in the coming years.
- As part of this disruption, investors and analysts believe that D&A strategies will improve company performance and bring higher valuations.
D&A’s greatest potential lies in improving operations
- Investors and analysts expect D&A to enable companies across sectors to achieve various broad business objectives over the next two years.
- Their highest expectation is for D&A to act as a source of companies’ improved operating performance (i.e., increased profitability) over the next two years.
Issuers are moving aggressively on IT, but strategy lags
- Investors and analysts have broad confidence that issuers have the technical building blocks needed to execute ambitious data and analytics strategies.
- However, respondents are much more likely to find fault with issuers’ integration of data and analytics into their business strategies.
Investors and analysts are at an inflection point in their use of D&A information
- Investors and analysts routinely seek D&A information and receive it proactively from issuers. However, sell-side analysts see only tepid interest in D&A among their buy-side clients.
- Faced with such uneven information, most investors and analysts report using an unstructured, ad hoc approach when analyzing issuers’ data and analytics strategies.
Companies in every sector can realize the promise of data and analytics
- Of all respondents, 62% say that they would view investing in a company in their sector more favorably if it were to use D&A specifically to improve operating performance by controlling costs, shrinking inventory, and allocating resources optimally.
- In many ways, however, each sector has its own D&A story. Respondents’ views regarding which specific D&A opportunities are most attractive for companies vary considerably from sector to sector.
© 2020 KPMG Central Services, a Belgian Economic Interest Grouping ("ESV/GIE") and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.
