Asafinaltest,weregresstheenterprisevalue-to-capitalratio
against the after-tax operating margin to complete the
analysis:
In this sector, increasing the margin by 1% results in an
increase in the EV/capital ratio of 0.2376. Using this
regressionallowsustoestimatethemagnitudeoftheunder-
andovervaluationatindividualfirms.Forinstance,consider
Sarantis and Christian Dior (the two firms that looked
undervalued with the simple test):