Comparables Report

Comparables Report - company Judging from the extreme...

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How does this compare to your company’s current stock price? The company’s current stock price is set at $127.70 (as of 4/16/2011), and is pretty accurately measured by the Price/Cash Flow ratio using the mean from the selected companies ($123.76), but is still slightly lower than the actual current valuation. An even more accurate ratio however is the 2010 Price/Sales ratio ($129.93), but is still slightly over the true value of the company. A glance at the 5-year stock price chart on Google finance shows that the stock price reveals that the company has dramatic valuation cycles, having been around $50 in 2006, up to $140 in the middle of 2008 and shooting back down to $50 at the end of the year, but then increasing back to the $120 price area through the years of 2009-2011. Why do you think the comparables analysis has under or overvalued or exactly valued your
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Unformatted text preview: company? Judging from the extreme variation in the valuation of the Flowserve Corp in the previous years, it is very hard for this assignment to give an accurate valuation of the company, seeing as throughout the year of 2009 (where the majority of this data comes from), the price had increased from the dramatic fall in 2008 from around $55 up to $105. In that respect, the Price/Book ratio for 2009 would have been the most accurate form of measurement, but currently undervalues the company. The reason for significance in the increase in the company valuation is the steep increase in expected sales, which can be seen in the forecasted average growth, and the regression sales. Which companies are the most comparable to your company? The closest matched company comparable is for, Sulzer AG with its average price calculated to be $120.40....
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This note was uploaded on 09/07/2011 for the course BMGT 340 taught by Professor White during the Spring '08 term at Maryland.

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