Session 12: Equity Investments: Valuation Models
Reading 42: Market-Based Valuation: Price and Enterprise Value Multiples
LOS n: Discuss the importance of fundamentals in the method of comparables.
Enhanced Systems, Inc., has a price to book value (P/B) of five while the median P/B of a peer group of companies within the industry is five. Based on the method of comparables, an analyst would most likely conclude that ESI should be:
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A) |
bought as an undervalued stock. | |
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B) |
sold or sold short as an overvalued stock. | |
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C) |
viewed as a properly valued stock. | |
The price per dollar of book value is the same as that for the median of the peer group, which implies that it is likely properly valued. | 
发表于 2010-4-19 16:01
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