Business Valuation of Polo Ralph Lauren Corporation - Mark Moore ...

Cash flow forecasts show heavy losses from financing, but this is primarily due to the useof financing cash flows as filler after determining other values. Net income after 2005 issteadily on the rise, which is good news for the company.Equity ValuationsIntroductionFrom our valuations, and the information that we had available for use in derivingtheir capital structure, the Abnormal earnings growth model was the best valuation forPolo Ralph Lauren due to the continued growth of the firm and the steady growth of theearnings. We feel that with these valuations Polo Ralph Lauren is a fairly valued firm.Despite the fact that it failed to supply us with the accounting data that we needed toproperly value their capital structure.Method of Comparable ValuationForward P/E RatioCompetitor Price Per Share EPS Forward P/E RatioGap 21.51 $1.21 17.78Liz Clairborne 40.02 2.86 13.99Tommy Hilfiger 11.24 1.18 9.53Average ofCompetitors: 13.77Expected SharePriceIndustry Fwd. P/E Ratio Forward EPSPolo Ralph Lauren 13.77 $1.61 $22.17Forward P/E Ratio = (Price per Share)/(Forward EPS)Polo Expected Price = (Competitors Avg. P/E)*(Estimated Polo EPS)29