The following table provides summary data for Applied Materials Inc. and its competitors, KLA Tencor Corporation and Lam Research Corporation. (in millions) Applied Materials KLA Tencor Lam Research Company assumed value $20,513 $26,202 Equity assumed value $18,829 $27,143 NOPAT $ 1,145 $ 2,342 $ 1,176 $2,191 $1,684 $(941) 923.8shares 159.3 shares 144.5 shares Net income Net nonoperating obligations (assets) Common shares outstanding a. Compute the price to net income ratio for both KLA Tencor Corporation and Lam Research Corporation. Round answers to two decimal places, when applicable. Price to Net income ratio KLA Tencor Lam Research b. Use KLA Tencor Corporation and Lam Research Corporation as comparables, along with the price to net income ratios from part a, and then estimate for Applied Materials its equity intrinsic value, its equity intrinsic value, and its equity intrinsic value per share. 16.01 12.39 ✓ • Round equity intrinsic values to the nearest million. • Round equity intrinsic value per share to two decimal places. • Note: Leave "Company intrinsic value" answer blank or enter zero. Applied Materials Company intrinsic value Equity intrinsic value Fuit intrinsic $3,477 $3,313 $(289) $ 0 million 50.92 x million 47.043 71
The following table provides summary data for Applied Materials Inc. and its competitors, KLA Tencor Corporation and Lam Research Corporation. (in millions) Applied Materials KLA Tencor Lam Research Company assumed value $20,513 $26,202 Equity assumed value $18,829 $27,143 NOPAT $ 1,145 $ 2,342 $ 1,176 $2,191 $1,684 $(941) 923.8shares 159.3 shares 144.5 shares Net income Net nonoperating obligations (assets) Common shares outstanding a. Compute the price to net income ratio for both KLA Tencor Corporation and Lam Research Corporation. Round answers to two decimal places, when applicable. Price to Net income ratio KLA Tencor Lam Research b. Use KLA Tencor Corporation and Lam Research Corporation as comparables, along with the price to net income ratios from part a, and then estimate for Applied Materials its equity intrinsic value, its equity intrinsic value, and its equity intrinsic value per share. 16.01 12.39 ✓ • Round equity intrinsic values to the nearest million. • Round equity intrinsic value per share to two decimal places. • Note: Leave "Company intrinsic value" answer blank or enter zero. Applied Materials Company intrinsic value Equity intrinsic value Fuit intrinsic $3,477 $3,313 $(289) $ 0 million 50.92 x million 47.043 71
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter10: Stockholder's Equity
Section: Chapter Questions
Problem 94.4C
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Transcribed Image Text:Valuation Using the PE Multiple
The following table provides summary data for Applied Materials Inc. and its competitors, KLA Tencor Corporation and Lam Research Corporation.
(in millions)
Applied Materials KLA Tencor Lam Research
$20,513
$18,829
$26,202
$27,143
$ 1,145
$ 2,342
$1,176
$2,191
$(941)
$1,684
923.8shares 159.3 shares 144.5 shares
Company assumed value
Equity assumed value
NOPAT
Net income
Net nonoperating obligations (assets)
Common shares outstanding
a. Compute the price to net income ratio for both KLA Tencor Corporation and Lam Research Corporation.
Round answers to two decimal places, when applicable.
Price to Net income ratio
KLA Tencor
Lam Research
16.01
12.39
$3,477
$3,313
$(289)
b. Use KLA Tencor Corporation and Lam Research Corporation as comparables, along with the price to net income ratios from part a, and then estimate for Applied Materials its equity intrinsic value, its equity intrinsic value, and its
equity intrinsic value per share.
• Round equity intrinsic values to the nearest million.
• Round equity intrinsic value per share to two decimal places.
• Note: Leave "Company intrinsic value" answer blank or enter zero.
Applied Materials
$
Equity intrinsic value
$
Equity intrinsic value per share $ 47,043.71 ×
Company intrinsic value
0✔ million
50.92 million
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