Problem: Bears, Inc. has a book value of equity is $25.9 million dollars. Below is information about Bears and a peer group of companies.
Market Cap (millions) PB(current) 5 year Historical Growth Rate ROE Debt-to-Equity ratio
Bears, Inc. 24.00% 17.10% 23.00%
Lions Corp. $125.3 3.33 27.00% 15.00% 32.00%
Rams Co. $64.5 3.99 25.00% 16.40% 18.00%
Colts Corp. $58.7 4.05 28.00% 16.20% 28.00%
Bengals Inc. $94.5 3.15 21.00% 14.90% 31.00%
a. Identify a set of two companies to comparable for estimating the equity intrinsic value of Bears using the PB ratio. Describe your selection process.
b. Estimate the equity intrinsic value of Bears using PB ratio from the comparable companies identified earlier.