In 2015 Miller Drug Stores had sales per share of $122 on which it reported earnings per share of $2.45 and paid a dividend of $1.12 per share. Miller is expected to grow 3% in the long term, and has a beta of 0.90. The Treasury bond rate is 3%, and the market risk premium is 5.5%.

a. Estimate the price-to-sales multiple for Miller Drug.

b. The stock is currently trading for $34 per share. Assuming the growth rate is estimated correctly, what would the profit margin need to be to justify this price per share?