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You want to value the stock of a company that is not publicly traded. This company has earnings of $4.25 per share, and cash flows

You want to value the stock of a company that is not publicly traded. This company has earnings of $4.25 per share, and cash flows (CFs) of $1.85 per share. You have the following information on firms that are extremely similar to the firm that youre trying to value:

Company

Stock price per share

Earnings per share

Cash flow per share

A

14.85

2.48

1.36

B

65.41

8.14

6.62

C

36.09

3.86

4.28

a. What is the estimated stock price per share based upon the average price to earnings ratio (P/E ratio) for its peers?

b. What is the estimated stock price per share based upon the average price to cash flow ratio (P/CF ratio) for its peers?

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