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Valuation Ratios in The: Restaurant Industry

The document compares valuation ratios for 4 restaurant companies - an international franchise operator (Company A), international steakhouse (Company B), US variety and cake wholesale (Company C), and US airport restaurants (Company D). It analyzes the companies' price-to-book value (P/B) and price-to-earnings (P/E) ratios, noting that high growth and returns lead to higher P/B and P/E ratios, while low growth and returns result in lower ratios. Company C has the highest P/B and P/E due to strong growth and results, while Company B has the lowest ratios due to weak returns and growth.

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Pranav Aggarwal
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28 views8 pages

Valuation Ratios in The: Restaurant Industry

The document compares valuation ratios for 4 restaurant companies - an international franchise operator (Company A), international steakhouse (Company B), US variety and cake wholesale (Company C), and US airport restaurants (Company D). It analyzes the companies' price-to-book value (P/B) and price-to-earnings (P/E) ratios, noting that high growth and returns lead to higher P/B and P/E ratios, while low growth and returns result in lower ratios. Company C has the highest P/B and P/E due to strong growth and results, while Company B has the lowest ratios due to weak returns and growth.

Uploaded by

Pranav Aggarwal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Valuation Ratios in

the Restaurant
Industry
Business Analysis Valuation
Group 1

Overview

Company a: International Franchise operator

Company b: International Steakhouse

Company c: U.S variety and cake wholesale

Company d: U.S. airport restaurants

Company
Comparison

P/B Drivers

Differential between return on equity and cost


of equity.

Re>Ke => P>BV, Re<Ke => P<BV

P/E Drivers

Current and expected earnings

Companies that grows fast have higher P/E

Paying dividends causes P/E ratio to rise

Increasing debt causes P/E to fall

Price to Book equity


Valuation
Restaurant
C

P/B
4.4

Reason
High Growth &
Returns

3.9

High Return but


low growth

1.0

Low Return &


Growth

1.0

Rebounding
returns & low
growth

Price to Earnings equity


Valuation
Restaurant
C

P/E
34.5

Reason
Strong results
show growth

28.0

potential
High growth &
rebounding

20.0

returns
Hit the peak, no
growth

9.6

oppurtunities
Low returns &
low growth

Thank You

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