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You are evaluating shares in Ford (F) and comparing these to General Motors (GM). F is trading at $12.00 per share, had EPS last year
You are evaluating shares in Ford (F) and comparing these to General Motors (GM). F is trading at $12.00 per share, had EPS last year of $2.29 per share and is expected to have EPS next year which is 5% higher. GM is trading at $54.00 per share, had EPS last year of $8.82 per share and is expected to have EPS next year which is 2% higher. You believe F should trade at the same forward P/E as GM. Assuming you are right, compute the forward P/E of GM and use that to compute the expected stock price for F.
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