Suppose that in July 2013, Nike had EPS of $2.52 and a book value of equity of $12.48 per share.

a. Using the average P/E multiple in Table 7.2 , estimate Nike€™s share price.

b. What range of share prices do you estimate based on the highest and lowest P/E multiples in Table 7.2 ?

c. Using the average price to book value multiple in Table 7.2 , estimate Nike€™s share price.

d. What range of share prices do you estimate based on the highest and lowest price to book value multiples in Table 7.2 ?

Table 7.2 

Stock prices and Multipliers for the Footwear Industry (excluding Nike), July 2013

Transcribed Image Text:

Enterprise Value ($ million) Market Enterprise Value/Sales Capitalization ($ million) Enterprise Value/ÉBITDA Name P/E Price/Book 54,023 5.07 2.03 Nike, Inc. 55,970 23.29 15.71 Adidas AG 23,105 1.20 11.88 23,317 32.33 3.06 1.96 Puma AG 4,330 4,085 70.56 0.96 9.34 Wolverine World Wide 3,981 9.28 2,910 37.6 4.13 1.22 2,320 1.74 Steven Madden, Ltd. 2,140 18.4 3.68 10.70 Deckers Outdoor Corp. 1.36 1,990 1,923 16.74 2.67 8.73 Crocs, Inc. 1,470 1,240 11.46 2.4 1.10 6.74 1.54 Skechers U.S.A. 1,340 1,213 67.41 0.78 18.16 301 1.71 1.11 Weyco Group 325 16.53 9.69 R. G. Barry Corp. 2.31 6.44 197 174 14.92 1.19 132 6.61 Rocky Brands, Inc. 113 12.46 0.89 0.58 1.12 Average 29.84 2.44 9.76 Maximum 136% 70% 55% 86% Minimum -62% -63% -48% -34% All Ratios as of July 2013