Leuk hoor, ook de schrijver van het artikel reageert :
Ik schreef :
Dear mr. David Reilly,
Thank you very much for your article in the Wall Street Journal Europe about Versatel. I have a question about the enterprise value that you mention. Can you help me with the formula you used for it ?
With kind regards,
Hij antwoordde :
Sure, i'm not sure how familiar you are with financial terms, so i'll try and keep it simple, although forgive me if this is too simplistic. Enterprise value is the company's market capitalization (shrs outstanding x share price) plus net debt (total debt minus cash). in versatel's case, the cash that an investor expects the company to have on hand by the end of next year is important to come up with an appropriate enterprise value, also called ev. so, for example, if you think the company will have 110m euros in cash, the ev would be market cap minus 110 (versatel has no debt). if, as i used as an example in my article, you assumed it should have an ev that is about 5.2 times ebitda, and you assumed the consensus ebitda of 90 m euros for next year, the equation works out to
(x - 110)
------------ = 5.2
that works out to x = 578 (5.2 x 90, plus 110)
if the implied market cap is 578, with 456m shares outstanding, that suggests a share price of about 1.25.
of course there are a lot of variables that go into the ev because you have to make assumptions about the cash and then, you have to make assumptions about the appropriate multiple.
currently, versatel has an ev of about 370 million euros (market cap of 520 m euros minus 150m in cash on hand as of the quarter ending march.)
hope that helps,