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6. Multiples. Suppose you plan to use multiples to estimate the stock price of Electronic Arts (EA). You observed the following quantities from a list
6. Multiples. Suppose you plan to use multiples to estimate the stock price of Electronic Arts (EA). You observed the following quantities from a list of comparable companies in the same industry P/E EV/EBITDA Take Two Interactive Activision Blizzard Konami Ubisoft Entertainment 21.9x 14.7 21.7 9.6x 9.0x 9.8x 21.3x 3.1x where in the table P/E is the price-earning ratio, EV is enterprise value, and EBITDA represents earnings before interest, tax, depreciation and amortization. (a) Suppose EA currently has an EPS (Earnings per Share) of $2.64/share, what is your estimation of EA's stock price? Answer: (b) Suppose EA currently has an EBITDA of $260M, what is your estimation of EA's enterprise value? Answer: Hint: you have discretion over which company to use, just provide an explanation
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