You notice that Coca-Cola has a stock price of $42.01 and EPS of $1.86. Its competitor PepsiCo has EPS of $3.71. But, J...
You notice that Coca-Cola has a stock price of $42.01 and EPS of $1.86. Its competitor PepsiCo has EPS of $3.71. But, Jones Soda, a small batch Seattle-based soda producer has a P/E ratio of 35.4. Based on this information, what is one estimate of the value of a share of PepsiCo stock? One share of PepsiCo stock is valued at? (Round to the nearest cent.)
Homework Answers
PE ratio of Coca Cola = Price / EPS
= 42.01 / 1.86
= 22.59
Price of PepsiCo = EPS * PE Ratio of Coca Cola
= $ 3.71 * 22.59
= $ 83.79
As Coca COla and Pepsico are big companies, It is advicable to consider PE ratio of Coco Cola rather than Jonessoda
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