Cool Shoes (CS) had 2015 sales of $518 million. You expect sales to grow at 9% next year (2015), but decline by 1% per year after until you settle to a long-run growth rate of 4%. You expect EBIT to be 9% of sales, increases in net working capital requirements to be 10% of any increase in sales (hint: just the increase from the prior year), and net investment to be 8% of any increase in sales. (Note: this is in excess of depreciation).

Other 2015 data for Cool Shoes:

EPS= $1.65

Book value of equity= $12.05 per share

EBITDA= $55.6 million

Excess Cash= $100 million

Debt= $3 million

Shares outstanding= $21 million

Income tax is 30% of EBIT

WACC=10%

a.) Using the DCF method, determine the enterprise value of CS. (Hint: Don't forget the terminal value.)

b.) Using the answer from part a.) what is the price per share?

c.) Using the information from the comparable stock prices and multiples table, estimate the price per share using the average P/E multiple.

d.) Using the information from the comparable stock prices and multiples table, estimate the price per share using the average Enterprise Value to sales multiple.

e.) Using the information from the comparable stock prices and multiples table, estimate the price per share using the average Enterprise Value to EBITDA multiple.

f.) What range of prices do you estimate based on your analysis in Reqs b-e? Summarize the Low, High, and Average.

Comparable stock prices and mutliples for the Footwear Industry, 2015

Ticker	Name	Stock Price ($)	Market Capitalization ($ millions)	Enterprise Value ($millions)	P/E	Price/Book	Enterprise Value/Sales	Enterprise Value/EBITDA
KCP	Kenneth Cole Productions	26.75	562	465	16.21	2.22	0.9	8.36
NKE	NIKE, Inc	84.2	21,830	20,518	16.64	3.59	1.43	8.75
PMMAY	Puma AG	312.05	5,088	4,593	14.99	5.02	2.19	9.02
RBK	Reebok International	58.72	3,514	3,451	14.91	2.41	0.9	8.58
WWW	Wolverine World Wide	22.1	1,257	1,253	17.42	2.71	1.2	9.53
BWS	Brown Shoe Company	43.36	800	1,019	22.62	1.91	0.47	9.09
SKX	Sketchers USA	17.09	683	614	17.63	2.02	0.62	6.88
SRR	Stride Rite Corp.	13.7	497	524	20.72	1.87	0.89	9.28
DECK	Deckers Outdoor Corp.	30.05	373	367	13.32	2.29	1.48	7.44
WEYS	Weyco Group	19.9	230	226	11.97	1.75	1.06	6.66
RCKY	Rocky Shoes & Boots	19.96	106	232	8.66	1.12	0.92	7.55
DFZ	R.G. Barry Corp	6.83	68	92	9.2	8.11	0.87	10.75
BOOT	LaCrosses Footwear	10.4	62	75	12.09	1.28	0.76	8.3
			Average Lead (excel, KCP)		15.01	2.84	1.06	8.49
			Max (relative to Ave.)		51%	186%	106%	27%
			Min (relative to Ave.)		42%	61%	56%	22%