The following excerpts from past equity analyst reports illustrate the use of multiple ratios in communicating views

Question:

The following excerpts from past equity analyst reports illustrate the use of multiple ratios in communicating views about a stock’s value. In the first excerpt, from a report on Colorpak Ltd. (Australian Stock Exchange: CKL), the analyst has used a discounted cash flow valuation as the preferred methodology but notes that the stock is also attractive when a price-to-earnings ratio (PER in the report) is used. In the second excerpt, from a report on AB InBev (Euronext Belgium: ABI), an analyst evaluates the stock price (then trading at 42.80) by using two multiples, price to earnings (P/E) and EV/

EBITDA, in relation to revised forecasts.

image text in transcribed

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Equity Asset Valuation

ISBN: 9781119850519

3rd Edition

Authors: Jerald E Pinto, CFA Institute

Question Posted: