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Jorge Zaldys, CFA, is researching the relative valuation of two companies in the Aerospace/defense industry,NCI Heavy Industries (NCI) and Relay Group international (RGI). He has
Jorge Zaldys, CFA, is researching the relative valuation of two companies in the Aerospace/defense industry,NCI Heavy Industries (NCI) and Relay Group international (RGI). He has gathered relevant information on the companies in the following table EBITDA Comparisons(in millions except for per-share) Company Price per share Shares outstanding Market value of debt Book value of debt Cash and investments Net income Net income from continuing operations 49.5 Interest expense Depreciation and amortization Taxes RGI 150 5 million 2 million 50 52 NCI 100 100 112 49.5 4 Using the information in the above table, answer the following questions: A. Calculate PEBITDA for NCI and RGI B. Calculate EVIEBITDA for NCI and RGI C. Select NCI or RGI for recommendation as relatively undervalued. Justify your
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