Identifying Comparables and Valuation Using PB and PE Men’s Wearhouse Inc.’s book value of equity is $1,096 million and its forward earnings estimate per share is $2.47, or $117.2 million in total earnings. The following information is also available for MW and a peer group of companies (identified by ticker symbol) from the specialty retail sector.

Ticker Market Cap ($ mil.)

PB Current Forward PE

(FY1)

EPS 5-Year Historical Growth Rate ROE

(T 4Q)

Debt-to-Equity

(Prior Year)

MW. . . . . . . — — — 6.51% 35.88% 0.26 GCO . . . . . . $1,660.0 1.98 12.11 21.35% 10.95% 0.11 FRAN . . . . . 891.9 12.74 16.59 0.00% 75.15% 0.33 ZUMZ. . . . . 671.4 2.14 13.60 14.59% 13.42% 0.02 GES . . . . . . 2,400.0 2.29 13.82 (9.82)% 14.32% 0.01 JNY . . . . . . 1,080.0 1.06 14.26 (15.31)% (4.98)% 1.01 ASNA . . . . . 3,240.0 2.15 12.81 14.37% 10.77% 0.12 EXPR . . . . . 1,520.0 3.78 10.74 7.25% 36.55% 0.60 ANF . . . . . . 2,760.0 1.7 15.44 (15.50)% 8.73% 0.12 SSI . . . . . . . 620.8 1.53 13.62 5.80% 6.42% 0.33 TLYS. . . . . . 299.7 2.29 13.72 0.00% 22.11% 0.03 Required

a. Identify a set of three companies from this list to use as comparables for estimating the equity intrinsic value of MW using the market multiples approach.

b. Assume that you use as comparables the following set of companies: GCO, ASNA, and EXPR.

Estimate MW’s equity intrinsic value using the PB ratio from these peer companies.

c. Use the same comparables as in part b and estimate MW’s equity intrinsic value using the PE ratio from these peer companies.