Question
You are deciding whether to invest in Technics, Inc, manufacturer of concrete. You observe the Price to Earnings ratio of the following companies. Company P/E
You are deciding whether to invest in Technics, Inc, manufacturer of concrete. You observe the Price to Earnings ratio of the following companies.
Company P/E Ratio
Wilhelm Car Rentals, Inc. 19.7
Edison Booksellers, Inc. 20.9
Teslor Concrete and Asphalt 16.8
Goldstone Telecommunications 24.0
LaFern Concrete 17.1
Capple Concrete and Construction Materials 17.4
Technics has earnings of $48 million annually and has 15 million shares outstanding. It currently trades at $64/share in the market.
Should you buy Technics and why?
If the data in the table above remains unchanged over time, what price approximately (to the nearest dollar) do you expect Technics eventually to rise or fall to?
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