Question 1: Youre trying to value a mature and profitable firms stock based on\ comparable firms backward-looking price-to-earnings (PE) multiples.\ Your firms PE ratio is 12, while similar firms PE ratios average 16.\ Assuming that you're correct, this implies that the stock is:\ (a) Under-valued and you should buy it.\ (b) Under-valued and you should sell it.\ (c) Over-valued and you should buy it.\ (d) Over-valued and you should sell it.\ (e) Fairly-valued and you would be indifferent between buying or selling it.