Valuation: Comps & Precedents
Quick mental math: peers trade at a median P/E of 15x. Your target has net income of $80m and 100m diluted shares. What is the implied share price?
Model answer
Implied equity value = net income x P/E = $80m x 15 = $1,200m. Implied share price = $1,200m / 100m diluted shares = $12.00. Note the shortcut: because P/E is an equity multiple paired with an equity…
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