Question

After researching the competitors of Levi Strauss & Co (Levi’s), which is a private company, you...

After researching the competitors of Levi Strauss & Co (Levi’s), which is a private company, you determine that most comparable firms have the following valuation ratios (see the table below). Further research reveals that Levi Strauss’s EBITDA is $ 576.1 million and its Earnings per Share (EPS) is $1.5. The company has $25 million in cash, $1,441 million in debt (market value), and 84 million shares outstanding.

Urban Outfitters

GAP

Guess

American Eagle

EV/EBITDA

5.1

4.1

5.8

4.8

P/E

9

8.3

12.7

11.5

Estimate the stock price of Levi’s using the average EV / EBITDA of its competitors.

A. $29.31

B. $17.09

C. $33.09

D. $10.11

E. $25.95

F. $27.17

Use the information provided in the question above. Estimate the stock price of Levi’s using the average P / E of its competitors.

A. $47.24

B. $17.67

C. $15.56

D. $33.67

E. $18.25

F. $23.59

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