The Claremont Company is planning an initial public offering (IPO) and management would like to have an idea of an appropriate price to charge for a share of its stock.

The company plans to issue 100,000 shares. The Claremont Company’s most recent earnings per share (EPS) are $1.25; however, the consensus forecast among analysts who follow the company is for EPS to be $1.50.

The EPS and share price of four comparable firms are shown below:

Firm	EPS	Share Price	P/E ratio
A	$1.00	$18.00	18
B	0.60	13.20	22
C	10.00	140.00	14
D	2.20	57.20	26

Compute the value of a share of Claremont Company stock using the price-earnings multiples method.

Trailing P/E multiple valuation
Forward P/E multiple valuation