Question
20. Amanda, Inc. has a book value of equity is $44.2 million dollars and its forward earnings estimate is $10.9 million. Below is information about
20. Amanda, Inc. has a book value of equity is $44.2 million dollars and its forward earnings estimate is $10.9 million. Below is information about Amanda and a peer group of companies.
|
| Market Cap (millions) | PB (current) | Forward PE (FY1) | 5 year Historical Growth Rate | ROE (Trailing 4 quarters) | Debt-to-Equity Ratio |
| Amanda, Inc. |
|
|
| 24.00% | 17.10% | 23.00% |
| Barbara Corp. | $145.6 | 4.13 | 18.5 | 26.00% | 16.60% | 28.00% |
| Cindy Co. | $84.2 | 4.79 | 18.9 | 25.00% | 16.40% | 19.00% |
| Donna Corp. | $68.5 | 4.05 | 19.8 | 29.00% | 15.00% | 32.00% |
| Elisa, Inc. | $104.3 | 3.15 | 18.6 | 21.00% | 14.90% | 31.00% |
Required:
a. Identify a set of two companies to use as comparables for estimating the equity intrinsic value of Amanda, Inc. using the market multiple approach.
b. Estimate the equity intrinsic value of Amanda, Inc. using PB ratios from the comparable companies, assuming that Barbara Corp. and Cindy Co. are the comparable companies.
c. Estimate the equity intrinsic value of Amanda using PE ratios from the comparable companies, assuming that Barbara Corp. and Cindy Co. are the comparable companies.
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The Road To Wealth The Answers You Need To More Than 2000 Personal Finance Questions
Authors: Suze Orman
1st Edition
9781594484582
