Question
Use the following data for Nordstrom to estimate the values for a comparable department store, Macys. Nordstrom: Stock price (July 2018) $50.71 Earnings per share
Use the following data for Nordstrom to estimate the values for a comparable department store, Macys.
Nordstrom:
Stock price (July 2018) $50.71
Earnings per share $0.97
Book value per share $6.81
a. Macys book value per share was $19.27. If Macys produces the same price to book value as Nordstrom, what is the value of Macys stock?
b. Macys earnings per share was $0.54. If Macys has the same price-earnings ratio as Nordstrom, what is the value of Macys stock?
c. The actual price of Macys stock as of July 2018 was $36.54. What does this tell us about our valuation technique? What issues may be leading to any differences?
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Financial accounting
Authors: Walter T. Harrison Jr., Charles T. Horngren, C. William Thom
9th edition
978-0132751216, 132751127, 132751216, 978-0132751124
