You are analyzing a share by comparing its price/earnings ratio to three comparable companies in the industry.
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Question:
You are analyzing a share by comparing its price/earnings ratio to three comparable companies in the industry. The share price and the forward earnings estimate of the three companies are shown below. Company 1. Share price = $32.712, earnings = $2.32 Company 2. Share price = $60.417, earnings = $4.11 Company 3. Share price = $63.616, earnings = $4.48 Assuming that the company you are analyzing is typical for its industry and that the forward earnings estimate for the company is $2.18, what is your estimate for the appropriate price of the company's share? (Note that if the share prices for companies 1, 2 and 3 show three decimal places, just use the numbers as shown.)
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