Question 2 Consider the following information in Table 2 about two companies, SU and STA: Table...

  

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Question 2 Consider the following information in Table 2 about two companies, SU and STA: Table 2 SU STA Enterprise value (€) 58000 40000 Debt (€) 17000 12000 Cash (€) 6500 5000 Minority Interests (€) 400 700 Financial Investments (€) 3800 1150 Number of shares 2500 3000 EPS 2020 (€) 3.6 6.1 EPS 2021 (€) 4.2 6.4 where EPS 2020 and EPS 2021 stands for expected earnings per share for the year 2020 and 2021, respectively. Present results with one decimal (example: 1.45 rounded to 1.5). a) What is the total equity value and the equity value per share of each company? Explain your answer. [5 marks] b) The market prices per share of company SU and STA are €14.8 and €14.2, respectively. What is your investment recommendation for SU and STA based on the fundamental valuation done in Question 2a? Explain your answer. [5 marks] c) Using market prices of each company, what is the Price Earnings multiple for 2020 and 2021 (PE 2020 and PE 2021) for each company? Explain your answer. [5 marks] d) Assume that nominal growth rates (g) of dividends of company SU and STA are 4% and 0.8%, respectively. What is the 2020 and 2021 Price earnings expected growth (PEG) ratio for each company? Explain your answer. [5 marks] e) Considering information from Questions 2c and 2d what can you conclude about the relative valuation of companies SU and STA? Explain your answer. [5 marks] f) Is your investment recommendation based on the relative valuation in line with the one based on the fundamental valuation done in Question 2b? Explain your answer. [5 marks] Question 2 Consider the following information in Table 2 about two companies, SU and STA: Table 2 SU STA Enterprise value (€) 58000 40000 Debt (€) 17000 12000 Cash (€) 6500 5000 Minority Interests (€) 400 700 Financial Investments (€) 3800 1150 Number of shares 2500 3000 EPS 2020 (€) 3.6 6.1 EPS 2021 (€) 4.2 6.4 where EPS 2020 and EPS 2021 stands for expected earnings per share for the year 2020 and 2021, respectively. Present results with one decimal (example: 1.45 rounded to 1.5). a) What is the total equity value and the equity value per share of each company? Explain your answer. [5 marks] b) The market prices per share of company SU and STA are €14.8 and €14.2, respectively. What is your investment recommendation for SU and STA based on the fundamental valuation done in Question 2a? Explain your answer. [5 marks] c) Using market prices of each company, what is the Price Earnings multiple for 2020 and 2021 (PE 2020 and PE 2021) for each company? Explain your answer. [5 marks] d) Assume that nominal growth rates (g) of dividends of company SU and STA are 4% and 0.8%, respectively. What is the 2020 and 2021 Price earnings expected growth (PEG) ratio for each company? Explain your answer. [5 marks] e) Considering information from Questions 2c and 2d what can you conclude about the relative valuation of companies SU and STA? Explain your answer. [5 marks] f) Is your investment recommendation based on the relative valuation in line with the one based on the fundamental valuation done in Question 2b? Explain your answer. [5 marks]

Answer rating: 100% (QA)

a To calculate the total equity value and equity value per share for each company 1 SU Enterprise Value EV 58000 Debt 17000 Cash 6500 Minority Interes... View the full answer