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Joe has a current share price of $215.06 and is expected to have earnings per share...

Joe has a current share price of $215.06 and is expected to have earnings per share (EPS) next year of $17.72 per share. Analysts expect that Al's closest competitor, Joe"s, will have earnings next year of $6.25 per share. What is your current estimate of the value of one share of Al's stock using the method of comparables?

a.

$64.25
b.

$71.89
c.

$75.85
d.

$89.69
e.

$108.04
f.

None of the above is within $0.35 of the value of one share
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Answer #1
c.
$75.85
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Please find below the answer
Statement showing Computations
Particulars Amount
Current share price of Joe                   215.06
earnings per share of Joe                      17.72
PE Ratio = 215.06/17.72                 12.1366
earnings per share of AI                   6.2500
Current estimate of the value of one share of Al's stock = 12.1366 *6.25                      75.85
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