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What does Comps mean?
What are the essential elements you should know!
In this article, I will break down the notion of Comps Meaning so you know all there is to know about it!
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Comps Meaning Overview
The term “comps” can potentially be used in different situations and contexts and can mean different things.
I will provide you with the meaning of comps in:
- Real estate
Let’s get started.
Comps in Real Estate
What does comps mean in real estate?
The term comps is commonly used in real estate to refer to “comparables”.
For example, a real estate broker may tell you that he or she looked at different comps to determine the best purchase price for your transaction (it means that comparables were considered for price determination).
In essence, comps meaning in real estate is to use comparables to assign a value to a real estate property.
When assessing comps in real estate, a real estate broker, investor, or professional will try to determine a property’s value by assessing comparable factors such as:
- Property age
- Property location
- Property size
- Land size
- Property sales figures over time
- Nature of the property
The objective is to try to estimate what would a buyer, in the current market condition, pay for the property that is being evaluated.
Comps in Sales
What are comps in sales?
Generally speaking, sales comps refers to “comparable sales”.
A company may be comparing its sales figures for the current year to past years (that’s a sales comparison year-over-year or month-over-month).
The sales comps can also be in relation to other companies in the same industry or competitors.
If you wonder what are comparable sales in relation to your competitors, you are interested in determining your company’s sales position in relation to your main competitors.
Assessing your sales growth over time and in relation to companies in the same industry or competitors is an important measure of how well a company is performing in terms of overall sales.
Comps in Finance
What are comps in finance?
In finance, the term comp or comp analysis is used to refer to “comparable company analysis” representing a financial analysis of a company’s valuation.
The objective of comparable company analysis is to look at similar companies to the company being evaluated and use various financial analysis techniques to determine the company’s value.
For an accounting or valuation expert to perform a comparative analysis, they may use different financial metrics to compare peers or comparable companies, such as:
- Financial ratios
- Liquidity ratios
- Market capitalization
- Gross sales
- Net income
- Earnings per share
- Diluted earnings per share
- Price to gross revenue multiples
Once these financial metrics are assessed, the valuation expert will provide an assessment of what he or she considers to be the fair market value of the company.
Comps in Retail
What does comp mean in retail or what are comp sales?
In the retail industry, an important measure of a company’s success is to compare a retail store’s sales to that of other comparable stores.
A comp analysis can also be done with regards to the sales evolution of the same business over time (referred to as the same-store sales comp).
In essence, retailers look at their comps to assess how profitable their retail stores are so they can make better business decisions in how they are operated.
Another key measure that comparable same-store sales measures offers is that large retailers can assess whether new sales are attributable to existing stores or to the opening of new stores.
To get a more normalized measure of retail sales, you can exclude the sales figure of their new retail stores due to higher sales experienced for grand openings, sales promotions, and other factors that “old” or “existing” stores may not have.
Comps in Employment
What are comps in employment?
The term “comps” or “comp” in employment is used to refer to “compensation” or “remuneration”.
For example, an employee may have a base comp and a variable comp based on sales (like commission, bonus, or other types of compensation based on performance).
This means that an employee gets a base salary the employee can expect at all times and he or she can get additional compensation depending on sales performance.
Every company can have a different compensation plan for their employees.
To understand if you are getting “comped” adequately, it’s worth looking at the type of compensation paid to employees working in other companies doing a similar job or in the same industry.
What Are Comps (Other Meanings)
The term comp or comps can have a variety of meanings.
Let’s look at what other meaning the term comps can have depending on the context.
According to the Merriam-Webster dictionary, comp is defined as:
Something provided free of charge
For example, if you go to a hotel and they want to give you something for free and complimentary, the hotel will “comp you”.
Another meaning is:
To punctuate and support a jazz solo with irregularly spaced chords
Comp Meaning Takeaways
So there you have it folks!
What does comps stand for?
The term “comps” can be used in business in a variety of ways.
Generally, comps refers to comparables or compensation.
Here are some of the most common meaning ascribed to the term “comp” or “comps”.
In real estate, an appraiser will look at comps to appraise a real estate property (assess the market value of a property by looking at comparable properties).
In business, a valuation professional can use financial metric comps and perform market analysis to assess a company’s fair market value when dealing with investors, to establish a price for an IPO, or for other reasons.
In retail, the sales comps are used to compare the sales revenues of the same store over time.
Finally, in the labor market, an employee comp refers to an employee’s compensation package offered by the company.
Comp can be short for many other words depending on the context.
I brought to you the comp meaning in the context of business and real estate.
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Now, let’s look at a summary of our findings.
What Does Comp Mean Overview
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