Question: Valuation Using the PE Multiple The following table provides summary data for Applied Materials Inc. and its competitors, KLA Tencor Corporation and Lam Research Corporation.
Valuation Using the PE Multiple
The following table provides summary data for Applied Materials Inc. and its competitors, KLA Tencor Corporation and Lam Research Corporation.
| (in millions) | Applied Materials | KLA Tencor | Lam Research | ||
|---|---|---|---|---|---|
| Company assumed value | - | $10,000 | $11,739 | ||
| Equity assumed value | - | $9,197 | $13,454 | ||
| NOPAT | $1,444 | $440 | $674 | ||
| Net income | $1,377 | $479 | $769 | ||
| Net nonoperating obligations (assets) | $(1,369) | $803 | $(1,715) | ||
| Common shares outstanding | 1,160.0 | 157.9 | 158.5 |
a. Compute the price to net income ratio for both KLA Tencor Corporation and Lam Research Corporation.
Round answers to two decimal places, when applicable.
| Price to Net income ratio | |
|---|---|
| KLA Tencor | Answer
|
| Lam Research | Answer
|
b. Use KLA Tencor Corporation and Lam Research Corporation as comparables, along with the price to net income ratios from part a, and then estimate for Applied Materials Inc. its equity intrinsic value and its equity intrinsic value per share.
-
Round equity intrinsic value to the nearest million.
-
Round equity intrinsic value per share to two decimal places.
| Applied Materials | |||
|---|---|---|---|
| Equity intrinsic value | Answer
| million | |
| Equity intrinsic value per share | Answer
| ||
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