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Suppose Rocky Brands has earnings per share of $2.25 and EBITDA of $31.5 million. The firm also has 5.5 million shares outstanding and debt of
Suppose Rocky Brands has earnings per share of $2.25 and EBITDA of $31.5 million. The firm also has 5.5 million shares outstanding and debt of $115 million (net of cash). You believe Jared's Outdoor Corporation is comparable to Rocky Brands in terms of its underlying business, but Jared's has no debt. If Jared's has a P/E of 13.4 and an enterprise value to EBITDA multiple of 7.4 , estimate the value of Rocky Brands stock using both multiples. Which estimate is likely to be more accurate? Rocky Brands' stock value by using the P/E ratio is \$ per share. (Round to two decimal places.) The value of Rocky Brands by using the P/E ratio is \$ million. (Round to one decimal place.) The value of Rocky Brands by using the EBITDA ratio is $ million. (Round to one decimal place.) Rocky Brands' stock value by using the EBITDA ratio is \$ per share (Round to two decimal places.) Which estimate is likely to be more accurate? (Select from the drop-down menu.) Hint: The more accurate valuation method would take debt into consideration is the more accurate valuation method
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