For the second challenge in our “How to Use I-Metrix” series, we asked our Senior Analyst Elias-John (EJ) Kies to demonstrate how to uncover a company’s exposure to the fluctuating cost of oil and other commodities.
“Because of the granularity of the XBRL data that powers I-Metrix, we can easily extract specific information from company reports, such as fuel costs,” says E-J.
Using I-Metrix, he selected the airline industry, and filtered the list for those that reported “fuel costs.” He then generated graphs showing “fuel costs as percentage of revenue.” I-Metrix works with all the features of Excel’s functionality, so no additional formulations or cutting and pasting was necessary to automatically download the most current information and calculate results.
Plotting selected companies side by side, the first graph here shows highest and lowest percentage of fuel costs to revenue.
Plotting this data over 8 quarters, we can see a common trend.
But switching to a 4-year view, we see a dramatic shift. Two companies that start at close to the same point, but the gap grows as one company has not been as good at containing fuel costs.
A fourth graph shows the significant impact of fuel costs on stock prices. “An analyst would need to research more to find the reasons for this,” says EJ. “Maybe the planes are less efficient, maybe the airline’s hedging program is less effective, or maybe the economies of scale are not as favorable.”
EJ went on to perform similar analyses of freight carriers, to compare how another industry is impacted by oil prices, and found less exposure to oil prices as percentage of revenue. “That may be because theses prices can more easily be passed on to customers,” says EJ. “But I-Metrix makes this type of analysis of oil – and other commodities – very easy to perform.”
I-Metrix users and interested parties can email Elias-John Kies at ekies@edgar-online.com or call EJ for more details about using I-Metrix at (212) 457-8213.
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