Reading 44: Market-Based Valuation: Price and Enterprise Val 2011, face, center, method

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Session 12: Equity Investments: Valuation Models
Reading 44: Market-Based Valuation: Price and Enterprise Value Multiples

LOS k: Evaluate a stock by the method of comparables, and explain the importance of fundamentals in using the method of comparables.

 

 

Enhanced Systems, Inc., (ESI) has a leading price to book value (P/B) of four while the median P/B of a peer group of companies within the industry is six. Based on the method of comparables, an analyst would most likely conclude that ESI should be:

A) viewed as a properly valued stock.

B) sold as an overvalued stock.

C) bought as an undervalued stock.

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The price per dollar of book value is considerably lower than that for the median of the peer group, which implies that it may well be undervalued.

[此贴子已经被作者于2011-3-21 11:34:33编辑过]

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Enhanced Systems, Inc., (ESI) has a leading price to sales (P/S) of 0.18 while the median leading P/S of a peer group of companies within the industry is 0.10. Based on the method of comparables, an analyst would most likely conclude that ESI should be:

A) bought on margin as an undervalued stock.

B) bought as an undervalued stock.

C) sold or sold short as an overvalued stock.

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The price per dollar of sales is considerably higher than that for the median of the peer group, which implies that it may well be overvalued.

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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:

A) bought as an undervalued stock.

B) sold or sold short as an overvalued stock.

C) viewed as a properly valued stock.

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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.

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Proprietary Technologies, Inc., (PTI) has a leading price-to-earnings (P/E) ratio of 28 while the median leading P/E of a peer group of companies within the industry is 38. Based on the method of comparables, an analyst would most likely conclude that PTI should be:

A) sold as an overvalued stock.

B) sold short as an overvalued stock.

C) bought as an undervalued stock.

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The price per dollar of earnings is considerably lower than that for the median of the peer group, which implies that it may well be undervalued.

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Proprietary Technologies, Inc., (PTI) has a leading price-to-earnings (P/E) ratio of 28 while the median leading P/E of a peer group of companies within the industry is 28. Based on the method of comparables, an analyst would most likely conclude that PTI should be:

A) sold or sold short as an overvalued stock.

B) viewed as a properly valued stock.

C) bought as an undervalued stock.

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The price per dollar of earnings is the same as that for the median of the peer group, which implies that it is likely properly valued.

土豆妮

Proprietary Technologies, Inc., (PTI) has a leading price-to-earnings (P/E) ratio of 38 while the median leading P/E of a peer group of companies within the industry is 28. Based on the method of comparables, an analyst would most likely conclude that PTI should be:

A) sold or sold short as an overvalued stock.

B) viewed as a properly valued stock.

C) bought as an undervalued stock.

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The price per dollar of earnings is considerably higher than that for the median of the peer group, which implies that it may well be overvalued.