Trading & Distributors Stocks: Financial statements and historical data

How to compare Trading & Distributors companies

Trading and distribution companies earn a margin by sourcing goods and delivering them to customers. Compare the product traded, the terms of sale and the amount of inventory carried. Revenue size alone says little about profitability when margins are thin.

What to check in the company reports

• Review gross margins and distinguish principal trading from commission income.
• Compare receivable and inventory days with supplier credit, working-capital borrowings and cash collected.
• Check customer concentration, related-party transactions, commodity-price exposure and foreign-currency obligations.

Reading the valuations

Compare recurring earnings and cash conversion within the same product market. For low-margin traders, a modest credit loss or financing-cost increase can materially reduce profit; revenue multiples alone can be misleading.