What should be the average stock price per share

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Reference no: EM131157479

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

Reference no: EM131157479

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