29
/ June
2011
Harrington emphasizes key advantages of D&P Risk Premium Report
The Duff & Phelps Risk Premium Report and the Ibbotson SBBI Valuation Yearbook dominate the market for ERP and related cost of capital data. But, the fact that the D&P Report publishes specific information about the companies that comprise its portfolios “ enables analysts to gauge how similar (or dissimilar) their subject companies are to the companies that make up the portfolios, enabling an even further refinement of the cost of capital estimate,” Jim Harrington (Duff & Phelps) told CalCPA BV conference attendees earlier this month.
Harrington promoted some other benefits, in his opinion of the D&P product, as shown in the table below
| SBBI | Duff & Phelps | |
| Size study | Yes | Yes |
| Risk study | No | Yes |
| Size measures used | Market Cap | Market Cap + 7 alternative size measures |
| Risk measures used | N/A | Operating Margin CV Operating Margin CVROE |
| Number of portfolios | 9 Deciles + 10x, 10x, 10y, 10z | 25 |
| Exclusion of new and high-financial-risk companies | No | Yes |
| Analysis of high-financial-risk companies | No | Yes |
| Specific information about the companies that comprise the portfolios | No | Yes |