Assume you work for the financial research unit of an investment bank, and you are responsible for
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Question:
Assume you work for the financial research unit of an investment bank, and you are responsible for the financial analysis of The Monti Company. The firm has net profits of $12 million, sales of $165 million, and 3.0 million shares of common stock outstanding. The company has total assets of $80 million and total stockholders' equity of $50 million. It pays $1 per share in common dividends, and the stock trades at $25 per share. Given this information, determine the following:
- Monti's EPS
- Monti's book value per share and price-to-book-value ratio
- Monti's P/E ratio
- The company's net profit margin
- The stock's dividend payout ratio and its dividend yield
- The stock's PEG ratio, given that the company's earnings have been growing at an average annual rate of 7.5%
Identify and briefly discuss two potential weaknesses of your analysis and results.
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