Suppose Rocky Brands has earnings per share of $2.35 and EBITDA of $30.8 million. The firm also has 5.8 million shares outstanding and debt of $130.7 million (net of cash). You believe Jared's Outdoor Corporation is comparable to Rocky Brands in terms of its underlying business, but Jared's has no debt. If Jared's has a P/E of 13.3 and an enterprise value to EBITDA multiple of 7.6, estimate the value of Rocky Brands stock using both multiples. Which estimate is likely to be more accurate? Rocky Brands' stock price per share by using the P/E ratio is $ per share. (Round to two decimal places.)
Suppose Rocky Brands has earnings per share of $2.35 and EBITDA of $30.8 million. The firm also has 5.8 million shares outstanding and debt of $130.7 million (net of cash). You believe Jared's Outdoor Corporation is comparable to Rocky Brands in terms of its underlying business, but Jared's has no debt. If Jared's has a P/E of 13.3 and an enterprise value to EBITDA multiple of 7.6, estimate the value of Rocky Brands stock using both multiples. Which estimate is likely to be more accurate? Rocky Brands' stock price per share by using the P/E ratio is $ per share. (Round to two decimal places.)
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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Transcribed Image Text:Suppose Rocky Brands has earnings per share of $2.35 and EBITDA of $30.8 million. The firm also has 5.8 million shares
outstanding and debt of $130.7 million (net of cash). You believe Jared's Outdoor Corporation is comparable to Rocky Brands
in terms of its underlying business, but Jared's has no debt. If Jared's has a P/E of 13.3 and an enterprise value to EBITDA
multiple of 7.6, estimate the value of Rocky Brands stock using both multiples. Which estimate is likely to be more accurate?
Rocky Brands' stock price per share by using the P/E ratio is $ per share. (Round to two decimal places.)
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