Question

Step 1 - Compute Mean and Median Values for peer-organizations. (Exclude H/D from the computations.
Step 2 - Present and JUSTIFY your estimates using EACH of the following:.
a- Price/earnings
b- MV firm/EBIT(1 - tax rate)
c - MV equity/BV equity
d - MV firm/BV firm
e - Price/sales (x)
f - MV firm/sales (x)
Step 3 - Present your "estimated indicators of value" in a matrix format.
Step 4 - Present the implied value of HOG common stock per share for each indicator of value in matrix format.
Step 5 - Add a Text Box and present an evaluation of your best analysis for a "fair price" for HD Shares. Harley-Davidson Inc. produces motorcycles, motorcycle parts and related accessories and merchandise in the United States and internationally. It is headquartered in Milwaukee, Wisconsin. Use the following information on Harley-Davidson and five other similar companies to value Harley-Davidson as of December 31, 2004. Harley-Davidson Inc. 2004 ($ millions) Net income $    889.77 Number of common shares, millions        294.31 Earnings before interest and tax $ 1,506.16 Tax rate 35.0% Book value of equity $ 3,218.47 Book value interest-bearing debt $ 1,295.44 Total Sales $ 5,320.45 Total Assets $ 5,483.29 Harley- Arctic Polaris Marine Winnebago Davidson Cat Brunswick Industries Products Industries Comparison of Timberland with Comparable Companies: Growth Rates, Financial Risks, Size, Returns 5-year growth rate in sales (%)                15.5             6.2             4.1             6.1           15.5            10.8 5-year growth rate in eps (%)                28.1           11.1           47.1           15.9           25.1            17.2 Interest coverage ratio (x)                60.9 *             8.9           85.1 * * Total liabilities to assets (%)                  0.4             0.3             0.6             0.5             0.2              0.5 Total assets ($ millions)              5,483            286         4,346            793            110             395 Indicators of Value Price/earnings (x) 16.9 17.8 27.8 28.6 18.6 MV firm/EBIT(1-tax rate) (x) 17.3 19.4 24.3 29.0 17.6 MV equity/BV equity (x) 2.8 2.8 8.0 7.7 6.5 MV firm/BV firm (x) 2.8 2.3 7.7 7.7 6.5 Price/sales (x) 0.8 0.9 1.6 2.7 1.2 MV firm/sales (x) 0.8 1.1 1.7 2.7 1.2 * These companies have little or no interest-bearing debt outstanding.

Answer 1