Question
Stryker Corporation is a leading medical technology company headquartered in Kalamazoo, Michigan, that trades on the New York Stock Exchange. Use the following information on
Stryker Corporation is a leading medical technology company headquartered in Kalamazoo, Michigan, that trades on the New York Stock Exchange. Use the following information on Stryker and seven other similar companies (indicated by their ticker symbols) to calculate Stryker's implied stock value using each of the 5 indicators of value provided in the chart below. Use the mean values for the 7 other similar companies in the industry as the benchmark to calculate Stryker's implied stock value using its financial data
Stryker Corporation ($ millions) | |
Sales | 10,921 |
---|---|
Net income | 1,661 |
Number of common shares (millions) | 368 |
Earnings before interest and tax | 2,239 |
Tax rate | 28.00% |
Book value of equity | 9,142 |
Book value interest-bearing debt | 2,802 |
Stryker | BAX | BDX | COV | MDT | SNN | STJ | ZMH | |
---|---|---|---|---|---|---|---|---|
Indicators of Value | ||||||||
Price/earnings (X) | 17.8 | 19.0 | 25.4 | 20.7 | 14.8 | 23.1 | 24.0 | 20.8 |
MV firm/EBIT(1 Tax rate) (X) | 19.0 | 23.6 | 25.1 | 20.5 | 17.8 | 25.4 | 26.9 | 21.5 |
MV firm/sales (X) | 3.5 | 3.1 | 3.1 | 3.5 | 4.5 | 4.9 | 5.8 | 3.8 |
MV equity/BV equity (X) | 3.4 | 5.9 | 4.2 | 3.3 | 2.5 | 5.1 | 5.0 | 2.5 |
MV firm/BV firm (X) | 2.0 | 1.8 | 2.1 | 3.2 | 1.8 | 4.2 | 2.1 | 1.8 |
MV = Market value; BV = Book value. Market value is estimated as book value of interest-bearing debt + market value of equity.
Note: Round your intermediate calculations to 1 decimal place. Round your final answers to 2 decimal places.
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