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Module 3: Market Multiple Valuation

Module 3: Market Multiple Valuation. Mairin Talerico. Snapshot of Toyota. Limited liability, joint-stock company incorporated under Commercial Code of Japan; started in 1930s Primarily in automotive industry, but also financial services and others Sold 9.98 million vehicles in fiscal 2013

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Module 3: Market Multiple Valuation

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  1. Module 3: Market Multiple Valuation Mairin Talerico

  2. Snapshot of Toyota Limited liability, joint-stock company incorporated under Commercial Code of Japan; started in 1930s Primarily in automotive industry, but also financial services and others Sold 9.98 millionvehicles in fiscal 2013 Sell in 170 different countries and regions Primary markets: Japan, North America, Europe and Asia

  3. Toyota’s Enterprise Value • Yahoo Finance Market Cap = $186.78 billion (compared to $406B) • Yahoo Finance EV = $332.37 billion (compared to $450B) •  Differences in shares outstanding issue 1.58B v 3.45B

  4. EPAT Multiple $173.68 > 117.88 Undervalued  Buy Less: NFL = $43,917

  5. NEA Multiple TM’s multiple= 2.60 $117.88 > 72.81 Overvalued  sell

  6. R&D Multiple TM’s multiple= 32.40 $117.88 > 50.70 Overvalued  sell

  7. Advertising Multiple • TM’s multiple= 78.82 $117.88 > 0.92 Overvalued sell

  8. Comparison to Honda Motor Company The following multiples are calculated using only Honda as a comparable entity due to IFRS: $117.88 > 45.76 Overvalued  sell $117.88 > 50.58 Overvalued  sell

  9. Comparison to Honda Cont. $117.88 > 47.20 Overvalued  sell $117.88 > 46.29 Overvalued  sell

  10. Combining Estimates of Equity Value per Share < $117.88 Overvalued sell

  11. Issues and Takeaways • Discrepancy with shares outstanding between financial statements/Tokyo Stock Exchange & Yahoo Finance • 3.45B v 1.58B • Not confident in the multiples method • Multiples are inconsistent • Wide range of Equity values • Companies don’t appear very comparable

  12. Questions?

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