Question
As a health care analyst, you are valuing the stocks of Hasbro Inc. (NYSE: HAS) in March 2013. Based on an average of estimates obtained
As a health care analyst, you are valuing the stocks of Hasbro Inc. (NYSE: HAS) in March 2013. Based on an average of estimates obtained from capital asset pricing model (CAPM) and bond yield plus risk premium approaches, you estimate that HASs required rate of return is 9 percent. You have gathered the data from HASs 2012 annual report (amounts in millions of dollar). Although sales growth picked up in 2012, it has slowed considerably in recent years and you are concerned that trend will ultimately be reflected in profit margins. Given this consideration, you make the following long-term forecasts: Profit margin = 9.0 percent Dividend payout ratio = 35.0 percent Earnings growth rate = 7.0 percent Based on these data, what is HASs justified P/S?
1.700
18.725
0.985
4.815
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