How to Determine the Revenue of a Subsidiary Belonging to a Publicly Traded Company
To find the revenue of a subsidiary belonging to a publicly traded company, various steps and resources can be utilized. Here's a comprehensive guide to help you navigate through the process effectively. This article is particularly useful for investors, financial analysts, and researchers seeking accurate and reliable financial information.
Step 1: Checking Parent Company's Financial Reports
The first and most direct method is to review the parent company's financial reports, which should include a breakdown of revenue by business segment. These segments often represent subsidiaries. Here’s how to access and utilize these reports:
Annual 10-K and Quarterly 10-Q Filings with the SEC: These document types contain essential information, as they summarize the company's financial performance over one year for 10-K and major events occurring in the quarter for 10-Q. Accessing the Filings: The United States Securities and Exchange Commission (SEC) maintains an online database called EDGAR (Electronic Data Gathering, Analysis, and Retrieval) where these documents can be readily accessed.However, the exact breakdown can vary based on the complexity of the parent company's operations. If the subsidiary's revenue is not segregated, you may need to look for more detailed information.
Step 2: Reviewing Investor Relations Materials
The investor relations (IR) section of the parent company’s website is another valuable resource. Here, you can find:
Earnings Calls: These are audio or video records of the discussions during earnings announcements, where details about subsidiary performance are often discussed. Presentations: Slides and documents used in earnings calls or press conferences can provide additional insights. Supplementary Financial Information: This often includes detailed reports, charts, and graphs that can help you understand the financial health of the subsidiaries.Step 3: Searching for Press Releases
Press releases are a good source for obtaining specific revenue information about subsidiaries. Companies often announce significant financial events, such as acquisitions or divestitures, and revenue information is usually included in these releases.
Step 4: Utilizing Financial News and Data Services
Financial news outlets like Bloomberg, Reuters, or CNBC, as well as data services like FactSet or SP Capital IQ, offer insights and estimates on subsidiary revenues:
Insights and Estimates: These services provide up-to-date information and analysis that can help you form a more comprehensive picture of the subsidiary's performance. Expert Analyses: Investment analysts often write detailed reports that include revenue estimates for subsidiaries, which can be accessed through brokerage firms or financial analysis platforms.Step 5: Searching for Analyst Reports
Analyst reports are another critical resource. These reports, produced by professional investment analysts, can provide valuable insights into the financial performance of a subsidiary:
Initial Coverage Reports: These reports are often provided by brokerage firms and can include detailed analysis and forecasts. Quarterly and Annual Reviews: Regular updates by analysts can help you track the performance of a subsidiary over time.Step 6: Considering Industry Reports
Industry reports can also be helpful in determining the revenue of a subsidiary, especially if the subsidiary is a significant player in its market. Market research firms may publish reports that include revenue information or estimates for specific subsidiaries:
Market Share Analysis: These reports often include insights into the financial performance of competitors, which can provide context for the subsidiary's performance. Industry Trends: Understanding the broader industry trends can help you predict how the subsidiary may perform.Step 7: Contacting the Company Directly
If none of the above methods provide the specific information you need, you might consider contacting the company's investor relations department:
Email or Phone: Reach out to the IR department via email or phone number provided on the company's website. They can often provide additional clarifications or specific details. Referrals: If the information is not readily available publicly, the IR team may direct you to the appropriate department or individual within the company who can provide more detailed information.Understanding the Terminology: Subsidiaries and Publicly Traded Companies
It's important to understand the term "subsidiary" in the context of a publicly traded company. A subsidiary is an entity controlled by the parent company, usually owning 51% or more of the subsidiary's stock. From an accounting perspective, the parent company may consolidate the financial statements of the subsidiary if it holds more than 50% of the stock. However, if the subsidiary is not significant enough, its financials may not be disclosed separately.
Caveats and Considerations
The process of determining a subsidiary's revenue can be complex and may require a combination of various resources. Keep in mind the following:
Disclosure Practices: Not all subsidiaries are disclosed or separately reported. Factors such as the size of the subsidiary and the parent company's disclosure policies can affect the availability of information. Accounting Standards: Different accounting standards and practices can also impact the ease and accuracy of determining a subsidiary's revenue. Legal Rights as a Shareholder: State-specific rules may determine the extent to which as a shareholder, you can access books and records related to the financials of the company.By following these steps and resources, you can effectively determine the revenue of a subsidiary belonging to a publicly traded company and gain a deeper understanding of the company's financial health.