c) Compute the PB ratio for both Kohl's and Wal-Mart. (d) Use Kohl's and Wal-Mart as comparables, along with the PB ratios from part (c), and then estimate for Target its equity intrinsic value and its equity intrinsic value per share.
c) Compute the PB ratio for both Kohl's and Wal-Mart. (d) Use Kohl's and Wal-Mart as comparables, along with the PB ratios from part (c), and then estimate for Target its equity intrinsic value and its equity intrinsic value per share.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Need help with C & D
| (in millions) | Target | Kohl's | Wal-Mart |
| Company assumed value | -- | $13,487 | $322,123 |
| Equity assumed value | -- | $10,922 | $272,541 |
| Net operating assets | $22,640 | $8,092 | $122,082 |
| Book value of equity | $11,300 | $5,527 | $72,500 |
| Net nonoperating obligations (assets) | $11,340 | $2,565 | $49,582 |
| Common shares outstanding | 510.9 | 159.0 shares | 2,844.0 shares |
(a) Compute the price to net operating assets ratio for both Kohl's and Wal-Mart.
Kohls 1.76
Wal-Mart 2.64
(b) Use Kohl’s and Walmart as comparables, along with the price to NOA ratios from part a, and then estimate for Target its company intrinsic value, its equity intrinsic value, and its equity intrinsic value per share.
Average 2.16
|
Company intrinsic value $Answer million
|
$48,902 | ||
|
Equity intrinsic value $Answer million
|
$37,562 | ||
|
Equity intrinsic value per share $Answer
|
$73.52 |
(c) Compute the PB ratio for both Kohl's and Wal-Mart.
(d) Use Kohl's and Wal-Mart as comparables, along with the PB ratios from part (c), and then estimate for Target its equity intrinsic value and its equity intrinsic value per share.
Average of the two rounded ratios in (c) above
|
Use the rounded average calculated above to calculate the following:
|
|
Equity intrinsic value $Answer million
|
|
Equity intrinsic value per share $Answer
|
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