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MULTIPLE ANALYSIS

MULTIPLE ANALYSIS. Specialty Eateries Industry – Panera Bread Co. Yiwen Lin. Agenda. Introduction to valuation using market multiples Enterprise performance measures to use NEA EPAT Sales Industry performance measures to use EBITDA FCF Combination and Compare multiples

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MULTIPLE ANALYSIS

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  1. MULTIPLE ANALYSIS Specialty Eateries Industry – Panera Bread Co. Yiwen Lin

  2. Agenda • Introduction to valuation using market multiples • Enterprise performance measures to use • NEA • EPAT • Sales • Industry performance measures to use • EBITDA • FCF • Combination and Compare multiples • Confidence analysis • Stock Recommendation • Q&A

  3. Introduction to valuation using market multiples • Stock screening device • Market method • Steps • Summary measures of performance • Comparable companies • Ratio Computation • Est. Value = Summary performance measure x Market Multiple • Enterprise value vs. Equity value

  4. Enterprise performance measures to useNEA Multiples UNDERVALUED

  5. Enterprise performance measures to useEPAT Multiples UNDERVALUED

  6. Enterprise performance measures to useSales Multiples UNDERVALUED

  7. Industry performance measures to useEBITDA Multiples UNDERVALUED

  8. Industry performance measures to useFCF Multiples SLIGHTLY UNDERVALUED

  9. Combine and Compare Multiples • Similar results from NEA, EPAT, Sales, and EBITDA Multiples • Undervalued stock price

  10. Confidence Analysis • Inherent inconsistency • Presumption • Reliance on market • How to treat deviations? • Arguments • Fraudulent Financial Statements • How comfortable with the choices of comparable? • How to compute the multiple? Take an average or weighted-average?

  11. Recommendation  Buy • Warren Buffett’s Value Investing Strategy • Why? • Panera’s stock is undervalued. • No guarantee for true intrinsic value based on market multiple valuation

  12. QUESTIONS

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