After researching the competitors of EJH Enterprises, you determine that most co

Question

After researching the competitors of EJH Enterprises, you determine that most comparable firms have the following valuation ratios: Comp 4 10 17 Comp 2 Comp 1 12 12.5 EVIEBITDA P/E19 18 20 EJH Enterprises has EPS of $2.00, EBITDA of $290 million, $28 million in cash, $40 million in debt, and 105 million shares outstanding. What range of prices is consistent with both sets of multiples? The range of prices will be Highest price within both the P/E and EVIEBITDA ranges is s (Round to two decimal places.) Lowest price within both the P/E and EVIEBITDA ranges is . (Round to two decimal places.)

Explanation / Answer

Equity value = (EV/ EBITDA * 290) + 28 - 40

Equity value comp 1 = 3,468

Equity value comp 2 = 3,178

Equity value comp 3 = 3,613

Equity value comp 4 = 2,888

P0 for comp 1 = 3,468/ 210 = 16.51

P0 for comp 2 = 3,178/ 210 = 15.13

P0 for comp 3 = 3,613/ 210 = 17.20

P0 for comp 4 = 2,888/ 210 = 13.75

Lowest price within both the P/E and EV/EBITDA ranges is ($13.75)

Highest price within both P/E and EV/EBITDA ranges is ($17.20)

Comp 1 Comp 2 Comp 3 Comp 4 EV/EBITDA 12 11 12.5 10 P/E 19 18 20 17

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