Sugg, Inc., is a private company that designs drums and guitars. During the most recent...
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Sugg, Inc., is a private company that designs drums and guitars. During the most recent fiscal year, the company had revenues of $325 million and earnings of $15 million. The company has filed a registration statement with the SEC for its IPO. Before the stock is offered, the company's investment bankers would like to estimate the value of the company using comparable companies. The investment bankers have assembled the following information based on data for other companies in the same industry that have recently gone public. In each case, the ratios are based on the IPO price. Company Price/Earnings Fendler Corp. 18.8% Stockglausner Group 19.5x Rutter International 24.1x Barton-Stover, Inc. 22.4x After the IPO, Sugg, Inc will have 20 million shares outstanding. Which of the following IPO price is correctly estimated for Sugg, Inc using the price/earnings ratio? $22.4 O $24.1 O $15.9 O $19.5 O $18.8
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