Question

Given the information below for Seger Corporation, compute the expected share price at the end of 2017 using price ratio analysis. Assume that the historical average growth rates will remain the same for 2017.

(Do not round intermediate calculations. Round your answers to 2 decimal places.)

YEAR	2011	2012	2013	2014	2015	2016
PRICE	$78.90	$84.80	$83.50	$81.00	$102.50	$117.90
EPS	4.39	5.10	5.90	6.60	7.15	8.15
CFPS	7.42	8.36	8.80	10.27	11.89	13.16
SPS	61.50	66.50	65.90	69.40	80.60	88.60

	SHARE PRICE
USING P/E RATIO
USING P/C/F RATIO
USING P/S RATIO

Answer 1

Computation of share price for YEAR 2017:

Particulars	2011	2012	2013	2014	2015	2016		Average
	$	$	$	$	$	$		$
Share Price (P)	78.9	84.8	83.5	81	102.5	117.9
EPS	4.39	5.1	5.9	6.6	7.15	8.15		6.22
CFPS	7.42	8.36	8.8	10.27	11.89	13.16		9.98
SPS	61.5	66.5	65.9	69.4	80.6	88.6		72.08
P/E Ratio	17.97	16.63	14.15	12.27	14.34	14.47		14.97
P/CFPS	10.63	10.14	9.49	7.89	8.62	8.96		9.29
P/SPS	1.28	1.28	1.27	1.17	1.27	1.33		1.27
Price for 2017								Share Price 2017
USING P/E RATIO	AVERAGE P/E X AVERAGE EPS				=	14.97 X 6.22		93.05
USING P/CFPS RATIO	AVERAGE P/CFPS X AVERAGE CFPS				=	9.29 X 9.98		92.73
USING P/SPS RATIO	AVERAGE P/SPS X AVERAGE SPS				=	1.27 X 72.08		91.24