Estimate the percentage of over pricing or under pricing

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Case Study: You have been invited to review two financial institutions. You have been given the following information. Expected net income for Numbers is $2,348 million and expected net income for Biggest Loser is $1, 579 million. Market value of equity of Numbers is $16, 325 million and market value of equity of Biggest Loser is $10, 739 million. Book value of equity of Numbers is $9,467 million and book value of equity of Biggest Loser is 7,914 million. Both institutions are in stable growth phase with a growth rate of 3.85%. According to your analysis it seems that market has priced Numbers fairly.

Question: Estimate the percentage of over pricing or under pricing of Biggest Loser (use PBV multiple to aid you in your estimation and assume that COE is the same for both companies)

 

Reference no: EM133526547

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