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8. Ametek, Inc. is a billion dollar manufa...

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8. Ametek, Inc. is a billion dollar manufacturer of electronic instruments and motors headquartered in Paoli, Pennsylvania. Use the following information on Ametek and five other similar companies to value Ametek, Inc. on December 31, 2001. Ametek, Inc., 2001 ($ millions) Net income $66.1 Number of common shares (millions) 32.82 Earnings before interest and tax $112.3 Tax rate 22% Book value of equity $335.1 Book value interest-bearing debt $470.8 Ametek Emerson Electric Franklin Electric AO Smith Woodward Governor American Power Conv. Comparison of Ametek with Comparable Companies: Growth Rates, Financial Risks, Size, Returns 5-year growth rate in sales (%) 3.3 6.8 1.4 8.1 10.2 15.2 5-year growth rate in eps (%) 5.1 1.3 9.2 (5.4) 19.6 3.4 Interest coverage ratio (x) 4.8 8.0 38.0 3.0 12.3 * Total liabilities to assets (x) 0.7 0.6 0.4 0.7 0.5 0.1 Total assets ($ millions) 1,029 15,046 196 1,294 585 1,421 Indicators of Value Price/earnings (x) 23.2 16.1 32.0 12.4 25.0 MV firm/EBIT (1-Tax rate) (x) 23.3 16.2 34.7 13.2 25.0 MV equity/BV firm (x) 3.9 3.5 1.0 2.1 2.3 MV firm/BV firm (x) 2.7 3.3 1.0 1.8 2.3 Price/sales (x) 1.5 1.4 0.4 1.0 2.0 MV firm/sales (x) 1.9 1.4 0.8 1.1 2.0 NOTE: *American Power Conversion has no interest bearing debt outstanding. MV=Marketing Value; BV=Book Value. Market value is estimated as book value of interest-bearing debt + Market value of equity. Earnings are fiscal year earnings.

 

Paper#8586 | Written in 18-Jul-2015

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