Suppose a company is expected to generate earnings per share of $$3$ next year. The average PE

ratio of comparable firms is $12.$ Estimate this company$$s stock price using the comparative

$($relative$)$ valuation approach.

Market Value of Debt $($million$)$ $$2,000$

Number of Shares Outstanding $($million$)150$

Enterprise Value

Comparable Companies MV Enterprise

as Multiple of:

Equity Value EBITDA EBIT EBITDA EBIT

A $$13,600$ $$22,000$ $$3,500$ $$2,200$

B $$1,330$ $$1,800$ $$200$ $$130$

C $$1,600$ $$2,000$ $$400$ $$210$

Median $$1,600$ $$2,220$ $$400$ $$210$

Mean $$5,510$ $$7,907$ $$1,367$ $$847$

PCP $$3,000$ $$2,600$

Intrinsic Value $-$ Median

Implied Value $-$ Mean

Compute the share price of PCP using the median EBITDA and EBIT multiples of the

comparable companies.