问一道题：NO.PZ201512300100001106

问题如下：

Mark Cannan is updating research reports on two well-established consumer companies before first quarter 2011 earnings reports are released. Hissupervisor, Sharolyn Ritter, has asked Cannan to use market-based valuations when updating the reports.

Delite Beverage is a manufacturer and distributor of soft drinks and recently acquired a major water bottling company in order to offer a broader productline. The acquisition will have a significant impact on Delite’s future results.

You Fix It is a United States retail distributor of products for home improvement, primarily for those consumers who choose to do the work themselves. The home improvement industry is cyclical; the industry was adversely affected by the recent downturn in the economy, the level of foreclosures, and slow home sales. Although sales and earnings at You Fix It weakened, same store sales are beginning to improve as consumers undertake more home improvement projects. Poor performing stores were closed, resulting in significant restructuring charges in 2010.

Before approving Cannan’s work, Ritter wants to discuss the calculations and choices of ratios used in the valuation of Delite and You Fix It. The dataused by Cannan in his analysis is summarized in Exhibit 1.

Exhibit 1.Select Financial Data for Delite Beverage and You Fix It

Cannan advises Ritter that he is considering three different approaches to value the shares of You Fix It:

Approach 1  Price-to-book (P/B) ratio

Approach 2  Price-to-earnings (P/E) ratio using trailing earnings

Approach 3   Price-to-earnings ratio using normalized earnings

Cannan tells Ritter that he calculated the price-to-sales ratio (P/S) for You Fix It, but chose not to use it in the valuation of the shares. Cannan states to Ritter that it is more appropriate to use the P/E ratio rather than the P/S ratio because:

Reason 1  Earnings are more stable than sales.

Reason 2  Earnings are less easily manipulated than sales.

Reason 3  The P/E ratio reflects financial leverage whereas the P/S ratio does not.

Cannan also informs Ritter that he did not use a price-to-cash flow multiple in valuing the shares of Delite or You Fix It. The reason is that he could not identify a cash flow measure that would both account for working capital and non-cash revenues, and also be after interest expense and thus not be mismatched with share price. Ritter advises Cannan that such a cash flow measure does exist.

Ritter provides Cannan with financial data on three close competitors as well as the overall beverage sector, which includes other competitors, in Exhibit 2. She asks Cannan to determine, based on the price-to-earnings growth (PEG) ratio, whether Delite shares are overvalued, fairly valued, or undervalued.

Exhibit 2.Beverage Sector Data

After providing Ritter his answer, Cannan is concerned about the inclusion of Tasty Root Beer in the comparables analysis. Specifically, Cannan asksRitter:

"I feel we should mitigate the effect of large outliers, but not the impact of small outliers (i.e., those close to zero), when calculating thebeverage sector P/E. What measure of central tendency would you suggest we use to address this concern?"

Ritter requests that Cannan incorporate their discussion points before submitting the reports for final approval.

6. Based upon the information in Exhibits 1 and 2, Cannan would most likely conclude that Delite’s shares are:

选项：

overvalued.

undervalued.

fairly valued.

解释：

C is correct.

The P/E-to-growth (PEG) ratio is calculated by dividing a stock’s P/E by the expected earnings growth rate, expressed as a percent. To calculate Delite’s PEG ratio, first calculate the P/E ratio: $65.50/$3.50 = 18.71. In this case, the forward earnings should be used given the recent acquisition of the water bottling company. Next, calculate Delite’s PEG ratio: 18.71/12.41 = 1.51.

Comparing Delite’s PEG ratio of 1.51 to the PEG ratio of 1.74 (16.59/9.52) for Fresh Iced Tea, 1.31 (15.64/11.94) for Nonutter Soda, and to the beverage sector average of 1.52 (16.40/10.80), it appears that Delite’s shares are fairly valued. This is determined by the fact that Delite’s PEG ratio is in the middle of the range of PEG ratios and very close to the sector average. Therefore, the shares appear to be fairly valued.