Company A’s EPS is \($1.50\) . Its closest competitor, Company B, is trading at a P/E of 22. Assume the companies have a similar operating and financial profile.

i. If Company A’s stock is trading at \($37.50\) , what does that indicate about its value relative to Company B?

ii. If we assume that Company A’s stock should trade at about the same P/E as CompanyB’s stock, what will we estimate as an appropriate price for Company A’s stock?