Stryker Corporation is a leading medical technology company headquartered in Kalamazoo, Michigan, that trades on the New York Stock Exchange. Use the following information on Stryker and seven other similar companies (indicated by their ticker symbols) to calculate Stryker's implied stock value using each of the 5 indicators of value provided in the chart below. Use the mean values for the 7 other similar companies in the industry as the benchmark to calculate Stryker's implied stock value using its financial data Stryker Corporation ($ millions) Sales 9,421 Net income 1,546 Number of common shares (millions) 353 Earnings before interest and tax 2,179 Tax rate 23.50% Book value of equity 9,067 Book value interest-bearing debt 2,772 Stryker BAX BDX COV MDT SNN STJ ZMH Indicators of Value Price/earnings (X) 17.8 17.4 23.5 20.3 13.3 21.6 22.5 20.8 MV firm/EBIT(1 − Tax rate) (X) 18.2 22.1 22.1 20.5 16.3 23.9 25.4 21.5 MV firm/sales (X) 3.5 3.1 3.1 3.5 4.2 3.4 4.3 3.8 MV equity/BV equity (X) 3.1 4.4 4.2 3.3 2.7 3.6 3.5 2.5 MV firm/BV firm (X) 2.0 1.8 2.1 1.7 1.8 2.7 2.1 1.8 MV = Market value; BV = Book value. Market value is estimated as book value of interest-bearing debt + market value of equity.
Stryker Corporation is a leading medical technology company headquartered in Kalamazoo, Michigan, that trades on the New York Stock Exchange. Use the following information on Stryker and seven other similar companies (indicated by their ticker symbols) to calculate Stryker's implied stock value using each of the 5 indicators of value provided in the chart below. Use the mean values for the 7 other similar companies in the industry as the benchmark to calculate Stryker's implied stock value using its financial data Stryker Corporation ($ millions) Sales 9,421 Net income 1,546 Number of common shares (millions) 353 Earnings before interest and tax 2,179 Tax rate 23.50% Book value of equity 9,067 Book value interest-bearing debt 2,772 Stryker BAX BDX COV MDT SNN STJ ZMH Indicators of Value Price/earnings (X) 17.8 17.4 23.5 20.3 13.3 21.6 22.5 20.8 MV firm/EBIT(1 − Tax rate) (X) 18.2 22.1 22.1 20.5 16.3 23.9 25.4 21.5 MV firm/sales (X) 3.5 3.1 3.1 3.5 4.2 3.4 4.3 3.8 MV equity/BV equity (X) 3.1 4.4 4.2 3.3 2.7 3.6 3.5 2.5 MV firm/BV firm (X) 2.0 1.8 2.1 1.7 1.8 2.7 2.1 1.8 MV = Market value; BV = Book value. Market value is estimated as book value of interest-bearing debt + market value of equity.
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
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Stryker Corporation is a leading medical technology company headquartered in Kalamazoo, Michigan, that trades on the New York Stock Exchange. Use the following information on Stryker and seven other similar companies (indicated by their ticker symbols) to calculate Stryker's implied stock value using each of the 5 indicators of value provided in the chart below. Use the mean values for the 7 other similar companies in the industry as the benchmark to calculate Stryker's implied stock value using its financial data
| Stryker Corporation ($ millions) | |
| Sales | 9,421 |
|---|---|
| Net income | 1,546 |
| Number of common shares (millions) | 353 |
| Earnings before interest and tax | 2,179 |
| Tax rate | 23.50% |
| Book value of equity | 9,067 |
| Book value interest-bearing debt | 2,772 |
| Stryker | BAX | BDX | COV | MDT | SNN | STJ | ZMH | |
|---|---|---|---|---|---|---|---|---|
| Indicators of Value | ||||||||
| Price/earnings (X) | 17.8 | 17.4 | 23.5 | 20.3 | 13.3 | 21.6 | 22.5 | 20.8 |
| MV firm/EBIT(1 − Tax rate) (X) | 18.2 | 22.1 | 22.1 | 20.5 | 16.3 | 23.9 | 25.4 | 21.5 |
| MV firm/sales (X) | 3.5 | 3.1 | 3.1 | 3.5 | 4.2 | 3.4 | 4.3 | 3.8 |
| MV equity/BV equity (X) | 3.1 | 4.4 | 4.2 | 3.3 | 2.7 | 3.6 | 3.5 | 2.5 |
| MV firm/BV firm (X) | 2.0 | 1.8 | 2.1 | 1.7 | 1.8 | 2.7 | 2.1 | 1.8 |
MV = Market value; BV = Book value. Market value is estimated as book value of interest-bearing debt + market value of equity.
Note: Round your intermediate calculations to 1 decimal place. Round your final answers to 2 decimal places.
Transcribed Image Text:Stryker Corporation is a leading medical technology company headquartered in Kalamazoo, Michigan, that trades on the New York
Stock Exchange. Use the following information on Stryker and seven other similar companies (indicated by their ticker symbols) to
calculate Stryker's implied stock value using each of the 5 indicators of value provided in the chart below. Use the mean values for the
7 other similar companies in the industry as the benchmark to calculate Stryker's implied stock value using its financial data
Stryker Corporation ($ millions)
Sales
Net income
Number of common shares (millions)
Earnings before interest and tax
Tax rate
Book value of equity
Book value interest-bearing debt
Indicators of Value
Price/earnings (X)
MV firm/EBIT (1 - Tax rate) (X)
MV firm/sales (X)
MV equity/BV equity (X)
MV firm/BV firm (X)
Indicators
Price/earnings (X)
MV firm/EBIT(1 - Tax rate) (X)
MV firm/sales (X)
MV equity/BV equity.(X)
MV firm/BV firm (X)
9,421
1,546
353
2,179
23.50%
9,067
2,772
Stryker's implied
stock value
Stryker
17.8
18.2
3.5
3.1
2.0
BAX
17.4
22.1
3.1
4.4
1.8
BDX
23.5
22.1
3.1
4.2
2.1
COV
MV = Market value; BV = Book value. Market value is estimated as book value of interest-bearing debt + market value of equity.
Note: Round your intermediate calculations to 1 decimal place. Round your final answers to 2 decimal places.
D
20.3
20.5
3.5
3.3
1.7
MDT
13.3
16.3
4.2
2.7
1.8
SNN
21.6
23.9
3.4
3.6
2.7
STJ
22.5
25.4
4.3
3.5
2.1
ZMH
20.8
21.5
3.8
2.5
1.8
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