Question
You are trying to price Giraldo Vineyards, a publicly-traded Argentine wine company, but your peer group is composed entirely of US vineyards. The summary statistics
You are trying to price Giraldo Vineyards, a publicly-traded Argentine wine company, but your peer group is composed entirely of US vineyards. The summary statistics (all in US $ terms) are below:
Giraldo Vineyards | Publicly traded US Vineyards | |
PE | 9 | 15 |
ROE | 15% | 12% |
Expected Growth Rate | 3% | 3% |
Assuming that both Giraldo Vineyards and the US companies are mature (growing at a constant rate forever) and that the US peer group is fairly priced, given its fundamentals, how underpriced or overpriced is Giraldo Vineyards, relative to the US peer group? (You can assume that the cost of equity for Argentine companies is 3% higher than the cost of equity for the US peer group).
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started