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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Jorge Zaldys, CFA, is researching the relative valuation of two companies in the Aerospace/defense industry,NCI Heavy Industries (NCI) and Relay Group international (RGI). He has gathered relevant information on the companies in the following table.
|
EBITDA Comparisons(in € millions except for per-share) |
||
|
Company |
RGI |
NCI |
|
Price per share |
150 |
100 |
|
Shares outstanding |
5 million |
2 million |
|
Market value of debt |
50 |
100 |
|
Book value of debt |
52 |
112 |
|
Cash and investments |
5 |
2 |
|
Net income |
49.5 |
12 |
|
Net income from continuing operations |
49.5 |
8 |
|
Interest expense |
3 |
5 |
|
Depreciation and amortization |
8 |
4 |
|
Taxes |
2 |
3 |
Using the information in the above table, answer the following questions:
A. Calculate PEBITDA for NCI and RGI.
B. Calculate EVIEBITDA for NCI and RGI.
C. Select NCI or RGI for recommendation as relatively undervalued. Justify your
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