Valuation with P/E and P/B multiples CrossTex Industries is a west Texas based natural gas producer and distributor that you are trying to value. Using the method of comparables, assess the value of CrossTex. Information is provided concerning the current share price (PPS), current earnings per share (EPS) and the current book value of equity per share (BPS) for Cross-Tex and three of its competitors. Required: Value CrossTex using the P/E and P/B multiples. PPS CrossTex Industries RGC Resources Atmos Engergy Corp. Kinder Morgan 24.33 25.75 63.40 EPS 2.83 1.78 1.55 3.11 BPS 28.13 17.82 18.15 21.75 6. Using the price earnings multiple, what is the value per share for Value CrossTex Industries when performing a valuation based on the market approach? $6.08 b. $16.89 $47.80 $46.28 $49.87 7. Using the Price-to-book multiple, what is the value per share for Value CrossTex Industries when performing a valuation based on the market approach? a $55.30 b. $541.22 $19.24 $50.52 $53.44 8. Which company appears to be an "outlier" which should be omitted when computing the industry average market-to-book ratio? a. CrossTex Industries b. RGC Resources Atmos Engergy Corp. Kinder Morgan None of the firms appear to be an outlier 8. From an empirical (estimation) perspective, the main problem of the discounted dividends valuation model (as compared to free cash flows and residual income) is that: a. Dividend payments are too variable compared with price variability b. The implied investment horizon to recover value is unrealistically short. c. The amount of price variability explained by dividend variability is relatively small. Next period's dividends are relatively difficult to predict