Identifying Comparables and Estimating Equity Value Using PB Assume that you wish to estimate the equity intrinsic value of McCormick & Company Inc. using PB ratios for comparable companies. The following online data are available from companies.

Company PB Current EPS 5-Year Historical Growth Rate ROE

(T 4Q)

Debt-to-Equity

(Prior Q)

McCormick. . . . . . . . . . . . . . 5.05 6.51% 23.14% 0.77 ConAgra Foods . . . . . . . . . . 2.58 5.75% 13.48% 1.72 Tyson Foods . . . . . . . . . . . . . 1.88 15.67% 13.82% 0.39 Flowers Foods . . . . . . . . . . . 4.496.92%24.70%0.92 Required

a. Identify two of the three companies as better comparables for use in valuation of McCormick.
Explain your reasoning. (????int: Consider each company on the basis of profitability, growth, and financial risk.)

b. Explain your rationale for eliminating the third company in part a.