Problem 1 As part of a valuation analysis, you want to estimate the equity value of ABC Corp. A junior analyst at your department has identified two comparables. Exhibit 1 lists the comparables, identified by company name, and provides selected financial information about them. Exhibit 2 presents selected financial information about ABC Corp. Estimate equity value per share of ABC Corp. using PE ratio and NOPAT multiple. Does your analysis suggest that ABC is overvalued or undervalued if it actually trades for $22.50? What is one advantage and one disadvantage of the valuation approach you used? Company Price per NOPAT name Company market value 27,000 8,000 share 50 64 Exhibit 1 EPS growth Earnings per rate Share (EPS) 11.50% 5 12.90% 4 Equity market value 3,750 2,450 Alpha Inc Beta Inc 2,250 800 Exhibit 2 ABC Corp Sales Net Income NOPAT Shares outstanding NOA NNO 6,520 1,500 1,750 800 1,200 1,800 Problem 1 As part of a valuation analysis, you want to estimate the equity value of ABC Corp. A junior analyst at your department has identified two comparables. Exhibit 1 lists the comparables, identified by company name, and provides selected financial information about them. Exhibit 2 presents selected financial information about ABC Corp. Estimate equity value per share of ABC Corp. using PE ratio and NOPAT multiple. Does your analysis suggest that ABC is overvalued or undervalued if it actually trades for $22.50? What is one advantage and one disadvantage of the valuation approach you used? Company Price per NOPAT name Company market value 27,000 8,000 share 50 64 Exhibit 1 EPS growth Earnings per rate Share (EPS) 11.50% 5 12.90% 4 Equity market value 3,750 2,450 Alpha Inc Beta Inc 2,250 800 Exhibit 2 ABC Corp Sales Net Income NOPAT Shares outstanding NOA NNO 6,520 1,500 1,750 800 1,200 1,800