When conducting a cross-sectional analysis, the analyst seeks to identify, by using comparative metrics, the valuation, debt-load, future outlook and/or operational efficiency of the target company. This allows the analyst to evaluate the target company's efficiency in these areas, and to make the best investment choice among a group of competitors or the industry as a whole.
When comparing the target firm to competitors, the analyst must be careful to consider the unique operating characteristics of each company and how that will affect any comparative metrics used.