ABC company wants to acquire XYZ. XYZ forecated the the follwoing:
EV | Sales | EBITDA | EV/Sales | EV/EBITDA | ||
Year | ($M) | ($M) | ($M) | x | x | |
2018 | $ 186,196,400 | $98,600,000 | $13,700,000 | 1.9 | 13.6 | |
2019 | $ 186,196,400 | $112,200,000 | $17,500,000 | 1.7 | 10.6 | |
2020 | $ 186,196,400 | $150,100,000 | $19,000,000 | 1.2 | 9.8 |
ABC Company wants to compare XYZ with its peers.
EV/Sales | EV/EBITDA | Total Debt | |
Company | x | x | to EV |
A | 2.92 | 9.88 | 0.11 |
B | 1.15 | 8.89 | 0.25 |
C | 3.52 | 14.52 | 0.22 |
D | 4.06 | 15.99 | 0.18 |
Average | |||
Median |
We see that both the EV/Sales and EV/Ebidta of XYZ is decreasing over time, indicating that the investors overvalued perception of the company is going down.
We see that company B has EV/Sales = 1.15 and EV/EBITDA = 8.89, both of which are more attractive than XYZ. Though its Debt/EV is a bit high, still it's good. Hence company B is a better buy.
ABC company wants to acquire XYZ. XYZ forecated the the follwoing: EV Sales EBITDA EV/Sales EV/EBITDA...