Identifying Comparables and Estimating Equity Value Using PB Assume that your superior requests that you estimate the equity intrinsic value of CGI Group Inc. using PB ratios for comparable companies—CGI Group is one of the world’s largest information technology and business process services companies. The following data are available on companies from the Web.

Ticker Market Cap ($ mil.)
PB Current EPS 5-Year Historical Growth Rate ROE (T 4Q)
Debt-to-Equity (Prior Q)
GIB . . . . . . . . . . . . . . — — 20.65% 15.99% 0.73 EQIX. . . . . . . . . . . . . $9,380 3.84 7.72% 3.84% 1.61 JCOM. . . . . . . . . . . . 2,310 3.20 11.60% 16.53% 0.35 XXIA . . . . . . . . . . . . . 933 1.87 60.34% 4.68% 0.40 QNST . . . . . . . . . . . . 294 1.24 (15.91)% (18.89)% 0.36 VOCS . . . . . . . . . . . . 269 2.93 (24.05)% (12.57)% 0.01 NTES . . . . . . . . . . . . 8,650 2.74 26.59% 24.86% 0.05 ULTI . . . . . . . . . . . . . 4,740 25.41 47.25% 16.86% 0.04 DMD. . . . . . . . . . . . . 498 1.01 9.50% (0.81)% 0.10 DRIV. . . . . . . . . . . . . 554 1.41 (17.73)% (4.44)% 0.75 Required

a. Identify the set of companies you plan to use as comparables. (????int: Consider each company on the basis of profitability, growth, and financial risk.)

b. Estimate the equity intrinsic value of CGI Group. It has a current book value of $3,946 million.

c. Prepare a memorandum to your superior identifying any issues that you believe should be considered before using the equity intrinsic value from part b for business decisions.