Reference no: EM132607166
Suppose you forecast Target's EBIT for the year ending January 31, 2013, to be $5,352 million, and you forecast Target's depreciation and amortization to be $2,361 million. A research analyst determines that an appropriate forward-looking EV/EBITDA multiple for Target is 6.9 times. The value of debt is $17,483. Based on this information,
Question 1: Estimate Target's enterprise value, or EV.
Question 2: Next, incorporating the value of Target's debt, estimate the firm's value of equity.
Question 3: Finally, based on 679.1 million shares outstanding, estimate the intrinsic value per share and compare it with Target's stock price on January 31, 2012, of $50.81.
Question 4: Based on this analysis, is Target's stock overvalued or undervalued?