Question
The Return on 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 on Equity (ROE) of the listed company OSIRUS S.A. is 10%, whereas the dividend payout ratio announced for the year is 37%. Current years earnings per share are 6 and the market risk premium is 4%. The current market price of OSIRUS S.A. stock 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 buying OSIRUS S.A. shares would be beneficial for potential investors. d. The Value/EBITDA of OSIRUS S.A. given that the: tax rate is 40%, cost of capital is 11%, Depreciation/EBITDA is 20%, Capital expenditures/EBITDA is 25%. e. The Price/Book ratio.
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