Pellagia Inc is a nationwide retail chain specializing in women's apparel. The company has 135 million shares outstanding, currently trading at $5.63 per shares. However, only 60% of the shares are actively traded in the market as the founder still holds 40%. The current debt outstanding is $140 million. The company holds $20 million in cash. Its operating metrics are: Revenue = $633 million, EBITDA = $57 million, and earnings attributable to stockholders = $38 million.

a. What is the current enterprise value (EV) of Pellagia?

b. Suppose you are asked to value Pellagia's shares based on its comparable firms? Do you think Pellagia is under or overvalued? Explain the basis of your valuation judgement. State your assumptions if required.

Abercrombie & Fitch ,AnnTaylor Stores Corp. Limited, Brands Inc.

Price to Earnings

13.04, 15.36, (3.40)

EV / Sales

1.58, 1.41, 0.96