P$15-35.$ 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

L$01,3$

and business process services companies. The following data are available on companies from the Web.

CGI GROUP

inc.

$($OIB$)$

Required

a$.$ Identify the set of companies you plan to use as comparables. $($Hint: 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 $$5,081$ 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.