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valuation based on comparable trades of companies

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See attached file.

Use Excel or Word. Use information of given in attachment to perform valuation based on comparable trades of companies. Equation: Value of equity=Value of firm-value of debt.

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This post shows how to conduct the valuation of a company using the relative value / multiples approach. It has used six multiple: Price/earnings, MV firm/EBIT(1-Tax rate), MV equity/BV equity, MV firm/BV firm, Price/sales and MV firm/sales (X).

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8. First we calculate the median and mean values for Ametek's comparable companies:
Parameter Ametek Emerson Electric Franklin Electric AO Smith Woodward Governor American Power Corp. Mean Excluding Ametek Median Excluding Ametek
5 year growth rate in sales (%) 3.3 6.8 1.4 8.1 10.2 15.2 8.34 8.10
5-year growth rate in eps (%) 5.1 1.3 9.2 -5.4 19.6 3.4 5.62 3.40
Interest coverage ratio (X) 4.8 8 38 3 12.3 15.33 10.15
Total liabilities to assets (X) 0.7 0.6 0.4 0.7 0.5 0.1 0.46 0.50
Total assets ($ millions) 1029 15046 196 1294 585 1421 3708.40 1294.00

Price/earnings (X) 23.2 16.1 32 12.4 25 21.74 23.20
MV firm/EBIT(1-Tax rate) (X) 23.3 16.2 34.7 13.2 25 22.48 23.30
MV equity/BV equity (X) 3.9 3.5 1 2.1 2.3 2.56 2.30
MV firm/BV firm (X) 2.7 3.3 1 1.8 2.3 2.22 2.30
Price/sales (X) 1.5 1.4 0.4 1 2 1.26 1.40
MV firm/sales (X) 1.9 1.4 0.8 1.1 2 1.44 1.40
Now let us ...

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