1. What is the average Trailing PE of the comparables? Round to one decimal place. 2....

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Questions 2-5: Suppose you are trying to value Gamecocks Inc. using the relative valuation method. Use the information provid

1. What is the average Trailing PE of the comparables? Round to one decimal place.

2. What is the average Forward PE of the three comparables? Round to one decimal place.

3. What is the average PEG of the comparables? Round to one decimal place.

4. If Gamecocks Inc is forecasted to earn $2.2 per share over the next twelve months, what is its implied price per share using relative valuation with the comps above? Round to one decimal place.

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Answer 1

Answer #1

1. Trailing PE of A = Price /EPS (forward) = 45/2.3 = 23.68421

Trailing PE of B = Price /EPS (forward) = 36/1.6 = 27.69231

Trailing PE of C = Price /EPS (forward) = 61/3.2 = 21.78571

Average Trailing PE of comparables = (23.68421+27.69231+21.78571)/3 = 24.4

2. Forward PE of A = Price /EPS (LTM) = 45/2.3 = 19.56522

Forward PE of B = Price /EPS (LTM) = 36/1.6 = 22.500

Forward PE of C = Price /EPS (LTM) = 61/3.2 = 19.0625

Average forward PE of comparables = (19.56522+22.50+19.0625)/3 = 20.4

3. Trailing PEG of A = Trailing PE /EPS growth = 23.68421/13 =1.821862

Trailing PEG of B = Trailing PE /EPS growth = 27.69231/15 =1.846154

Trailing PEG of C = Trailing PE /EPS growth = 21.78571/10 =2.178571

Average Trailing PEG of comparables = (1.821862+1.846154+2.178571)/3 = 1.9

Forward PEG of A = Forward PE /EPS growth = 19.56522/13 =1.5050

ForwardPEG of B = Forward PE /EPS growth = 22.50/15 =1.5

Forward PEG of C = Forward PE /EPS growth = 19.0625/10 =1.90625

Average Trailing PEG of comparables = (1.5050+1.5+1.90625)/3 = 1.6

4. Value of Gamecocks inc Share = forecasted earnings* Average Forward PE= 2.2*20.4 =$44.8

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1. What is the average Trailing PE of the comparables? Round to one decimal place. 2....

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