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 9,921 Net income 1,685 Number of common shares (millions) 358 Earnings before interest and tax 2,199 Tax rate 25.00% Book value of equity 9,092 Book value interest-bearing debt 2,782
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 9,921 Net income 1,685 Number of common shares (millions) 358 Earnings before interest and tax 2,199 Tax rate 25.00% Book value of equity 9,092 Book value interest-bearing debt 2,782
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 | 9,921 |
|---|---|
| Net income | 1,685 |
| Number of common shares (millions) | 358 |
| Earnings before interest and tax | 2,199 |
| Tax rate | 25.00% |
| Book value of equity | 9,092 |
| Book value interest-bearing debt | 2,782 |
| Stryker | BAX | BDX | COV | MDT | SNN | STJ | ZMH | |
|---|---|---|---|---|---|---|---|---|
| Indicators of Value | ||||||||
| Price/earnings (X) | 17.8 | 17.9 | 24.2 | 20.5 | 13.8 | 22.1 | 23.0 | 20.8 |
| MV firm/EBIT(1 − Tax rate) (X) | 18.5 | 22.6 | 23.1 | 20.5 | 16.8 | 24.4 | 25.9 | 21.5 |
| MV firm/sales (X) | 3.5 | 3.1 | 3.1 | 3.5 | 4.3 | 3.9 | 4.8 | 3.8 |
| MV equity/BV equity (X) | 3.2 | 4.9 | 4.2 | 3.3 | 2.9 | 4.1 | 4.0 | 2.5 |
| MV firm/BV firm (X) | 2.0 | 1.8 | 2.1 | 2.2 | 1.8 | 3.2 | 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.
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