Your company produced the following "reported" income statements during 2014-2015 period. You have recently completed a comparable company analysis and figured out that the applicable, average Mcap/LTM Net Income multiple for your company is 7.5x. Based on your comparable company analysis, what should be the average stock price per share if you plan to sell your company? (Show your work!)
| Reported Income Statement |
|
|
2014:Q3 |
2014:Q4
|
2015:Q3 |
|
Sales
|
3,500
|
4100
|
3600
|
|
COGS
|
2,200
|
2975
|
3000
|
|
Other Income
|
50
|
90
|
0
|
|
SG&A
|
675
|
700
|
120
|
|
Restructuring Charge
|
0
|
20
|
0
|
|
EBIT
|
675
|
545
|
480
|
|
Interest Expense
|
75
|
102
|
73
|
|
Pre-tax Income
|
600
|
443
|
407
|
|
Income Tax (38%)
|
228
|
168.34
|
154.66
|
|
Net Income
|
372
|
275
|
252
|
Additional Notes:
• In 2015:Q2, your company recorded a $100 mil. pre-tax inventory write-off due to fire in the company's warehouse.
• In 2014:Q3, your company realized a $50 mil. pre-tax gain ("other income") on the sale of a non-core business.
• In 2014:Q4, your company additionally realized a $40 mil. pre-tax gain ("other income") on the sale of a non-core business.
• In 2014:Q4, your company recognized a $20 mil. pre-tax restructuring costs in connection with a downsizing strategy.
• Your company has 125 mil. basic outstanding shares, with current stock price of $45 per share. The company has the following information about the options/warrants:
|
Options/warrants Tranche
|
Number of Shares (miL)
|
Exercise Price
|
|
Tranche 1
|
10.00
|
$ 5.00
|
|
Tranche 2
|
7.50
|
$ 25.00
|
|
Tranche 3
|
5.00
|
$ 30.00
|
|
Tranche 4
|
2.50
|
$ 35.00
|
|
Tranche 5
|
1.00
|
$ 40.00
|
|
Tranche 6
|
0.50
|
$ 55.00
|