XYZ Company stock is selling for $28

Finance Dec 26, 2020

XYZ Company stock is selling for $28.00 per share, with earnings per share of $3.20. ABC Company is a firm comparable to XYZ. ABC Company has earnings per share of $4.25. What would be a good estimate of the price per share of ABC Company?

Expert Solution

The price is computed as shown below:

= (Price of XYZ / Earnings per share of XYZ) x Earnings per share of ABC

= ($ 28.00 / $ 3.20) x $ 4.25

= 8.75 x $ 4.25

= $ 37.1875

Archived Solution

Unlocked Solution

You have full access to this solution. To save a copy with all formatting and attachments, use the button below.

Already a member? Sign In

Important Note: This solution is from our archive and has been purchased by others. Submitting it as-is may trigger plagiarism detection. Use it for reference only.

For ready-to-submit work, please order a fresh solution below.

Or get 100% fresh solution

Get Custom Quote