A firm reports book value of shareholders' equity of $850 million with 25 million shares outstanding. Those shares trade at $45 each in the stock market. An analyst values the equity by following the scheme: Value = Book value + Extra value. She calculates extra value of $675 million. Should she issue a buy or sell recommendation to her clients? Explain© BrainMass Inc. brainmass.com June 3, 2020, 11:28 pm ad1c9bdddf
Value of the company as per analyst is
Value = Book value + Extra ...
The solution recommends a buy or sell on stock based on its valuation.