Eve is also considering investing in Wistmans plc, which is a logistics and distributions business, which has recently taken over a major competitor and is now well positioned to consolidate its leadership position in the market. The following information is provided on Wistmans: Earnings retention ratio: 85
Eve is also considering investing in Wistmans plc, which is a logistics and distributions business, which has recently taken over a major competitor and is now well positioned to consolidate its leadership position in the market. The following information is provided on Wistmans:
Earnings retention ratio: 85%
Current share price: £4.20 Issued shares: 200,000
Market value of long term debt: £500,000 Book value of long term debt: £400,000 Market value of short term debt: £100,000 Book value of long term debt: £150,000 Market value of
EBITDA: £125,000
i. Calculate the market implied growth rate of the shares based on the above information
ii. Wistman’s main competitor, Butler Logistics is trading on a forward P/E ratio of 15.6. Based on the multiplier model, does Wistman’s appear under, over, or correctly valued compared to Butler?
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