Select Comparable Firms For The Target Firm Essay

1257 Words Jan 24th, 2016 null Page
To select comparable firms for the target firm with the similar characteristics, we cross-check a list of main competitors of European postal operators(Austrian Post, Bpost, Post NL and Deutsche Post-DHL). Figure2. Group revenue of selected companies
We can clearly see that the most of group revenue from Austrian Post, Bpost and Post NL are dependent on the domestic mail, which these firms have similar business models with the Royal Mail. And as the German mail and logistics giant, although Deutsche Post-DHL’s main revenue resource is from the logistics business. However, its market cap is generally several times larger than the other European postal operators which this firm’s performance will likely to affect the Royal Mail pricing locally. Therefore, this particularly postal operator’s market multiple should be accounted into the calculations as well.
For this pricing method, we select a value driver with the actual earnings per share(EPS). The reason why we choose this certain value driver is because that we can select these data from different analyst reports and/or annual reports from comparable firms which these data had been already audited commonly. Furthermore, we also apply for the associated market multiples for comparable firms with the equation of price per share/actual earnings per share. At first, we can see first chart from the Appendix B. We select these four firms’ actual EPS numbers from the UBS Research(2013) which these analyst reports published…

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