Multiples & Comps

Set a company beside its sector's peers on five measures, see what the peer benchmark implies per share, and adjust it before you reach a verdict.

Learning focus: A multiple only tells you something against peers that match on risk, growth and accounting, so the benchmark needs judgment before it gives a value.

Case file

Company

Scenario

Required return

Terminal growth

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Peers

Adjustments and verdict

Risk discount

Growth premium

House band

Verdict rests on

Peer data here is in summary form: one line per peer, with no statements behind it. The adjustments are your judgment of what that line leaves out.

PEG

Expected growth

Momentum

Reported EPS

Expected EPS

Standard deviation of surprises

Starting price

Ending price

Starting index

Ending index

Adjusted value per share

$45.99

On trailing P/E, median

Price

$44.50

Gap to adjusted value

3.24% below

Verdict

Fairly valued

House band 5.0%

Peers used

6 of 6

Ostrell Industries is on 17.05× trailing P/E against a peer median of 17.62× (3.24% discount). The value is $45.99, and the price is 3.24% below it, so with a 5.0% band the verdict is fairly valued. Peer data here is in summary form, so check what the peers leave out.

Company against the benchmark

Multiple	Peers	Company	Premium or discount	Value per share	Adjusted	Adjusted value	Verdict
Trailing P/E	17.62×	17.05×	3.24% discount	$45.99	17.62×	$45.99	Fairly valued
P/B	2.19×	2.89×	31.85% premium	$33.75	2.19×	$33.75	Overvalued
P/S	1.37×	1.51×	10.85% premium	$40.15	1.37×	$40.15	Overvalued
EV/EBITDA	10.81×	10.69×	1.02% discount	$45.05	10.81×	$45.05	Fairly valued
Dividend yield	2.48%	4.61%	46.27% discount	$82.83	2.48%	$82.83	Undervalued

Premium or discount is measured on price, so a dividend yield above the peers' reads as a discount. EV/EBITDA comes back to a share value after net debt.

What each benchmark implies per share

Peers and company

Company	Market cap (m)	P/E	P/B	P/S	EV/EBITDA	Yield	Growth	Beta	ROE
Halvorne Engineering	3,471.2	13.47×	1.60×	1.22×	9.05×	2.53%	4.63%	1.25	11.8%
Brackwater Tools	7,561.6	21.58×	3.77×	1.34×	11.26×	2.69%	6.78%	0.97	17.5%
Selwick Controls	3,813.4	18.36×	1.22×	1.53×	10.59×	1.94%	6.86%	1.07	6.7%
Dunmarrow Industries	7,944.3	18.87×	1.76×	1.39×	11.02×	2.51%	6.74%	1.17	9.3%
Corwen Hydraulics	1,796.0	16.88×	2.62×	1.31×	9.81×	2.44%	4.63%	1.11	15.5%
Pellmark Industrial	8,336.6	16.71×	3.72×	1.66×	11.22×	2.04%	6.48%	1.31	22.2%
Peer median	—	17.62×	2.19×	1.37×	10.81×	2.48%	—	—	—
Ostrell Industries	4,322.8	17.05×	2.89×	1.51×	10.69×	4.61%	10.00%	0.90	17.0%

The company's growth is the rate you typed for the PEG. The peers' is the expected growth in their summary line.

Normalized EPS

Normalized EPS, historical average

$2.41

P/E on historical average EPS

18.46×

Average ROE

16.64%

Book value per share

$15.41

Normalized EPS, average ROE × book value

$2.56

P/E on average ROE EPS

17.35×

Year	EPS	ROE
Y6	$2.26	16.6%
Y7	$2.35	16.7%
Y8	$2.33	16.1%
Y9	$2.50	16.8%
Y10	$2.61	17.0%

PEG

1.70

Peer PEG

2.85

Momentum indicators

Unexpected earnings

$0.15

Standardized unexpected earnings

1.50

Relative strength at the start

0.0500

Relative strength at the end

0.0540

Change in relative strength

7.95%

Worked from what you typed, not from the case. Relative strength is the share price over the index.