Suppose Rocky Brands has earnings per share of $2.44 and EBITDA of $31.3 million. The firm also has 4.9 million shares outstanding and debt of $125 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 13.1 and an enterprise value to EBITDA multiple of 7.1, estimate the value of Rocky Brands stock using both multiples. Which estimate is likely to be more accurate? Rocky Brands' stock value by using the P/E ratio is $ The value of Rocky Brands by using the P/E ratio is $ *** per share. (Round to two decimal places.) million. (Round to one decimal place.)
Suppose Rocky Brands has earnings per share of $2.44 and EBITDA of $31.3 million. The firm also has 4.9 million shares outstanding and debt of $125 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 13.1 and an enterprise value to EBITDA multiple of 7.1, estimate the value of Rocky Brands stock using both multiples. Which estimate is likely to be more accurate? Rocky Brands' stock value by using the P/E ratio is $ The value of Rocky Brands by using the P/E ratio is $ *** per share. (Round to two decimal places.) million. (Round to one decimal place.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Suppose Rocky Brands has earnings per share of $2.44 and EBITDA of $31.3 million. The firm also has 4.9 million
shares outstanding and debt of $125 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 13.1 and an enterprise
value to EBITDA multiple of 7.1, estimate the value of Rocky Brands stock using both multiples. Which estimate is likely
to be more accurate?
Rocky Brands' stock value by using the P/E ratio is $
The value of Rocky Brands by using the P/E ratio is $
per share. (Round to two decimal places.)
million. (Round to one decimal place.)
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