Compare the market price of the target company with the value estimates using EV / E * BDITA ratio and P/E ratios.

Finance

Discussion 5

Step 4: Follow the example in Q4-2, work out the relative valuation for your target company in the project

1. For your target company, also pick three to four companies in the same industry for comparison
2. 2. Collect financial statement for both the target company and its comparables .
3. 3. Estimate EBITDA P / E ratio, EV/EBITDA ratios for both the target company and its comparables
4.   4. Estimate the Enterprise value and equity value using the comparable EV / E * BITDAratios
5.   5. Estimate the equity value using the comparable P /E ratios.
6. Compare the market price of the target company with the value estimates using EV / E * BDITA ratio and P/E ratios