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

Based on the Comparable forward P/E, the implied stock valuation is well belowthe Actual Current Value of $38.41. There were three main competitors used for thisvaluation, and were based on the average of their forward P/E ratios. The Benchmarkgroup used has a large spread in their Price Per Shares which makes their P/E ratioswidely dispersed. This causes the comparable P/E ratio to have a lower quality since thecompetitors used have such varying ratios.Forward PEG RatioCompetitor Forward P/E 5 Yr. Growth Rate Fwd. PEGGap 17.78 6.93 2.57Liz Clairborne 13.99 10.54 1.33Tommy Hilfiger 9.53 2.76 3.45Average ofCompetitors: 2.45Industry Fwd. PEGAverageFwd. EPS5 Yr. GrowthRateExpectedPricePolo Ralph Lauren 2.45 1.61 8.94 $35.24Forward PEG = (Forward P/E)/(5 Yr GrowthRate)Polo Expected Price = (Competitors Fwd. PEG Avg)*(Fwd. EPS of Polo)*(5 Yr. Growth Rate of Polo)The implied stock valuation of PEG resulted fairly the same as the Actual CurrentValue of $38.41. The current earnings come close to the Forward PEG Valuation results,and should reflect the Future earnings. The Forward PEG valuation uses the threecompetitor’s averages of the Forward P/E ratios divided by the 5 year Growth Rate. TheIndustry Forward PEG valuation is more narrowed and more precise than the ForwardP/E Valuation results.30