Question
The return of equity (ROE) of the listed company OSIRUS S.A. is 10% whereas the dividend payout ratio announced for the year is 37%. Current
The return of equity (ROE) of the listed company OSIRUS S.A. is 10% whereas the dividend payout ratio announced for the year is 37%. Current year's earnings per share are 6$ and the market risk premium is 4%. The current market price of OSIRUS S.A. is 22$ per share. Given that the risk-free rate (T-Bond rate) is 5%, the company has a beta coefficient of 1 and dividends and stock earnings are expected to grow at the same rate. Estimate:
a. The expected growth rate and the P/E ratio.
b. The intrinsic value of OSIRUS S.A. using the P/E ratio approach.
c. Whether bying OSIRUS S.A. , shares would beneficial for potencial investors.
d. The Value/EBITDA of OSIRUS S.A. given that the:
--tax rate is 40%
--cost of capital is 11%
--Depriciation / EBITDA is 20%
--Capital expenditures / EBITDA is 25%
--The price/Book ratio.
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