Question

Suppose that in July​ 2013, Nike Inc. had EPS of ​$2.61 and a book value of equity of $12.52 per share.

   p/e | price/book | enterprise value / sales | enterprise value/EBITDA

AVG: 29.84 | 2.44 | 1.12 | 9.76

MAX: +136% | +70% | +55% | +86%

MIN:   -62% | -63% | -48% | -34%

a. Using the average​ P/E multiple from the table​ above, estimate​ Nike's share price.

b. What range of share prices do you estimate based on the highest and lowest​ P/E multiples in the table​ above?

c. Using the average price to book value multiple in the table​ above, estimate​ Nike's share price.

d. What range of share prices do you estimate based on the highest and lowest​ price-to-book value multiples in the table​ above?

Answer 1

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Answer:

a)

= 2.61 * 29.84 = 77.88

b)

= 77.88 *(1.36) = 183.66

= 77.88(1-0.62) = 29.57

c)

= 12.52 * 2.44 = 30.55

d)

= 30.55 *(1.7) = 51.93

= 30.55 *(0.37) = 11.30

Share Price = [EPS Average ]

Share Price Highest Range = [Share Price*(1+ Maximum Range)]

Share Price Lowest Rang = [Share Pricex(1+Minimum Range)]

Share Price = Book Value of Equity < Price Average]

Share Pricelighest Range = [Share Price*(1+ Maximum Range)]

Share Price Lovestrang = [Share Pricex (1+Minimum Range)]