Part E Target Corporation EV EBITDA Analysis


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Part E Target Corporation EV EBITDA Analysis

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Part E   Target Corporation: EV EBITDA Analysis

 

Let's suppose you forecast Target's EBIT for the year ending January 31, 2013, to be $5,352, and you forecast Target's depreciation and amortization to be $2,361. A research analyst determines that an appropriate forward-looking EV/EBITDA multiple for Target is 6.9 times. Based on this information,


1.     Estimate Target's enterprise value, or EV.

2.     Next, incorporating the value of Target's debt, estimate the firm's value of equity.

3.     Finally, based on 679.1 million shares outstanding, estimate the intrinsic value per share and compare it with Target's stock price on January 31, 2012, of $50.81.

4.     Based on this analysis, is Target's stock overvalued or undervalued

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