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Suppose you plan to use multiples to estimate the stock price of Electronic Arts (EA). You observed the following quantities from a list of
Suppose you plan to use multiples to estimate the stock price of Electronic Arts (EA). You observed the following quantities from a list of comparable companies in the same industry P/E Take Two Interactive 21.9x EV/EBITDA 9.6x Activision Blizzard 14.7x 9.0x Konami 21.7x 9.8 21.3x 3.1 x Ubisoft Entertainment where in the table P/E is the price-earning ratio, EV is enterprise value, and EBITDA represents earnings before interest, tax, depreciation and amortization. (a) Suppose EA currently has an EPS (Earnings per Share) of $2.64/share, what is your estimation of EA's stock price? (b) Suppose EA currently has an EBITDA of $260M, what is your estimation of EA's enterprise value?
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