What can we analyze from EV/EBITDA : 17.83 VS. 33.42

Expert Solution

Enterprise value (EV) is equal to its market value of equity(market capitalization) plus it's market value of debt less cash.

EBITDA is earnings before interest,taxes,depriciation and amortization.

EV/EBITDA is the enterprise value of a company divided by it's earnings before interest ,taxes,depriciation and amortization for the trailing twelve months.

A high ratio means the company is potentially overvalued ,on the other hand,a low ratio means the company is potentially undervalued.All things being equal lower this ratio is the better.EV/EBITDA values below 10 are considered to be healthy and above average.

This ratio is mostly used as a valuation metric to compare the relative value of different businesses.it's ideal for analysts and investors those who seek to compare companies within the same industry.This ratio is also used to analyze & measure a company's Return of Investment as well as its value.

In the case given both are unhealthy and below average as both are much above 10.Secondly 17.83 is undervalued than 33.42.On conclusion it can be said that both are not fairly valued.

jeff jeffy answered 1 year ago

explain the significance of Ev/Ebitda multiple in the valuation of the investment.

Consider the following data: Company Name Market Capitalization Enterprise Value (EV) EV/Sales EV/EBITDA EV/EBIT P/E Forward...

Consider the following data: Company Name Market Capitalization Enterprise Value (EV) EV/Sales EV/EBITDA EV/EBIT P/E Forward P/E Total Shares Alaska Air (ALK) 7,286 8,207 1.02x 5.1x 6.7x 7.7x 12.5x 124124 Peer Data American Airlines (AAL) 17,879 37,327 0.87x 5.7x 8.2x 10.5x 8.2x Delta Air Lines (DAL) 35,580 44,164 1.02x 5.7x 8.0x 10.8x 8.8x Hawaiian (HA) 2,023 2,057 0.73x 3.4x 4.1x 5.8x 7.2x JetBlue Airways (JBLU) 5,450 5,814 0.80x 4.1x 5.9x 4.9x 10.8x SkyWest (SKYW) 2,909 5,040 1.56x 7.2x 12.6x 6.6x...

Estimation of a company's stock price from another company's EV/EBITDA multiple: Assume the following Comps Inc....

Estimation of a company's stock price from another company's EV/EBITDA multiple: Assume the following Comps Inc. (EV/EBITDA) multiple = 7.7 Target Inc. EBITDA = $10,000,000 Target Inc. Debt = $5,000,000 Target Inc. outstanding shares = 1,000,000 Use the information above to estimate Target's implied stock price from Comps Inc.

What do ev/ebitda ratio and price to cash flow ratio show us and how do they...

What do ev/ebitda ratio and price to cash flow ratio show us and how do they compare? Evaluate the usefulness of these and other market multiple ratios in company evaluations

What are some ratios we can use to analyze an organization? What are they used to...

What are some ratios we can use to analyze an organization? What are they used to measure? Who uses these ratios?

Electrons of energies 10.2 eV, 12.09 eV, and 13.06 eV colliding with a hydrogen atom, can...

Electrons of energies 10.2 eV, 12.09 eV, and 13.06 eV colliding with a hydrogen atom, can cause radiation to be emitted from the latter. Calculate in each case the principle quantum number, n, of the orbit to which the electron in the hydrogen atom is raised and the wavelength of the radiation emitted if it drops back to the ground state.

EV/EBITDA multiple used in Comparable Company analysis may lead to a skewed valuation if peer firms...

EV/EBITDA multiple used in Comparable Company analysis may lead to a skewed valuation if peer firms are subject to different capital structure and tax regimes. true or false

Analyze the income statement and explain what we can learn about the company from reading the income statement.

2015 2016Sales 3,432,000 5,834,400COGS 2,864,000 4,980,000Other expenses 340,000 720,000Analyze the income statement and explain what we can learn about the company from reading the income statement.Deprec. 18,900 116,960total op. costs 3,222,900 5,816,960EBIT 209,100. 17,440Int. expense 62,500 176,000pre tax earnings. 146,600. (158,560)taxes (40%) 58,640 (63,424)Net Income. 87,960 (95,136)

Calculate EV/EBITDA, PE ratio and dividend yield for CVS (CVS), WAG (Walgreens) and FRED (Fred’s). Also...

Calculate EV/EBITDA, PE ratio and dividend yield for CVS (CVS), WAG (Walgreens) and FRED (Fred’s). Also calculate year-over-year sales growth and EBITDA growth. Using these together with other information of your choosing, explain why you would or wouldn’t invest in each of them. CVS Income Statement All numbers in thousands Revenue 12/31/2017 12/31/2016 12/31/2015 Total Revenue 184,765,000 177,526,000 153,290,000 Cost of Revenue 156,220,000 148,669,000 126,762,000 Gross Profit 28,545,000 28,857,000 26,528,000 Operating Expenses Research Development - - - Selling General and...

How do you calculate the 2020E EV/EBITDA for Rev Group Inc.? How do you calculate the...

How do you calculate the 2020E EV/EBITDA for Rev Group Inc.? How do you calculate the 2021E EV/EBITDA for Rev Group Inc.?

Question