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Jorge Zaldys, CFA, is investigating the relative valuation of two companies in the aerospace/defence industry, NCI Heavy Industries (NCI) and Relay Group International (RGI). He

Jorge Zaldys, CFA, is investigating the relative valuation of two companies in the aerospace/defence industry, NCI Heavy Industries (NCI) and Relay Group International (RGI). 

He has compiled relevant information about the companies in the following table.

relative valuation

Information

RGI

NCI

EBITDA

100

100

Interest expenses

0

20

earnings before taxes

100

80

Tax (40%)

40

32

Net Income

60

48

Cash and Short Term Investments

40

20

Debt MV

0

400

BV of debt

0

350

Price per share

10

20

Outstanding shares

100

30


Calculate RGI's EV/EBITDA and P/E ratio.

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