Question

You notice that​ Coca-Cola has a stock price of $41.37 and EPS of $1.99. Its competitor...

You notice that​ Coca-Cola has a stock price of $41.37 and EPS of $1.99. Its competitor PepsiCo has EPS of $3.75. ​But, Jones​ Soda, a small batch​ Seattle-based soda producer has a​ P/E ratio of 33.5. Based on this​ information, what is one estimate of the value of a share of PepsiCo​ stock?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

I will be trying to derive the value of the Pepsico in comparison to that of the price to earning of Coca-Cola rather than comparing it in relation to oo Jones soda because own soda is a very small company where is coca cola is representative of a very large company and Pepsico is also reflecting the same and hence I am going to value the Pepsico in respect to the relative price to earning ratio of The Coca-Cola

Hence the value of the share of the Pepsico stock is = (price to earning ratio of Coca-Cola X Earning per share)

= (41.37/1.99*3.75)

= $77.958

Earning per share of the Pepsico stock will be $77.958

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. Chapter 7. Stock Valuation Coca Cola (KYSE: KO) PepsiCo (NASDAQ: PEP) (a) Find the most...
1. Chapter 7. Stock Valuation Coca Cola (KYSE: KO) PepsiCo (NASDAQ: PEP) (a) Find the most recent P/E ratio of each company. Which one has a higher ratio? (b) How would you interpret the ratio?
Use yahoo finance or another provider to find information on Coca Cola Corporation. Its ticker symbol...
Use yahoo finance or another provider to find information on Coca Cola Corporation. Its ticker symbol is “KO”. Coca Cola's brands include Diet Coke, Coca-Cola Zero, Fanta, Sprite, Dasani, vitamin water, Powerade, Minute Maid, Simply, Del Valle, Georgia and Gold Peak. Coca Cola is one of the thirty members of the Dow Jones Industrials. Q1. How big is the company? If you bought all of the shares at the last price, how much would it cost? That is also known...
Coca Cola (KO) is an iconic American name. The company’s logo is immediately recognized worldwide. The...
Coca Cola (KO) is an iconic American name. The company’s logo is immediately recognized worldwide. The company has been in business since 1887 and sells 4,300 products worldwide. The company has increased dividends every year since 1963. On December 31, Coca-Cola ended its fiscal year. The following data was reported: Shareholder Equity                   $21.1 billion Earnings                                          8.92 billion Paid Dividends                              6.85 billion The last price for KO was $49/share. The company paid a dividend in November of $.40/share. Coca- Cola pays a quarterly...
A stock currently has $10 EPS. Analysts estimate EPS may grow at 20% per year over...
A stock currently has $10 EPS. Analysts estimate EPS may grow at 20% per year over the next five years. What is the estimated stock price in five years if an investor thinks the stock will then sell for a 10 P/E ratio?
3. Company A’s estimated EPS for the next twelve months (NTM) is $1.50. Its closest competitor,...
3. Company A’s estimated EPS for the next twelve months (NTM) is $1.50. Its closest competitor, Company B, is trading at a P/E (NTM) of 22. Assume the companies have a similar operating and financial profile. a. If Company A's stock were trading at $37.50, what would that indicate about its value relative to Company B? Explain. b. If we assume that Company A’s stock should trade at about the same P/E as Company B's stock, what will we estimate...
PRICE/EARNINGS RATIO A company has an EPS of $1.50, a book value per share of $14.55,...
PRICE/EARNINGS RATIO A company has an EPS of $1.50, a book value per share of $14.55, and a market/book ratio of 1.4x. What is its P/E ratio? The stock price should be rounded to the nearest cent. Round your answer to two decimal places.  x
Ramsay Corp. currently has an EPS of $3.10, and the market seems to price the stock...
Ramsay Corp. currently has an EPS of $3.10, and the market seems to price the stock with a PE ratio of 21. Given this information, you expect the stock price today to be $______ . Your team of analysts research the firm and believe that Ramsay will grow earnings at 6% per year. Therefore, your team sets a target price of $______ per share in one year.
As of December 31, 2019 Coca-Cola Inc. had 7,040 million shares of common stock issued and...
As of December 31, 2019 Coca-Cola Inc. had 7,040 million shares of common stock issued and 2,760 million shares in treasury. Diluted weighted average shares outstanding during fiscal 2019 were 4,314 million. On April 2, 2020 the stock was trading at 43.00 per share. Based on this information and the information provided below, complete the following: Capital structure: (in millions)               Operating liabilities                      $__________________________(1)               Debt                                                 $31,769               Total Liabilities                              $65,283               Common equity                             $21,098               Total Assets                     ...
Financial Learning Systems has 2.34 million shares of common stock outstanding and 126,779 shares of preferred...
Financial Learning Systems has 2.34 million shares of common stock outstanding and 126,779 shares of preferred stock. ? (The preferred pays annual cash dividends of ?$5.24 a? share, and the common pays annual cash dividends of 21 cents a? share.) Last? year, the company generated net profit? (after taxes) of $6,869,423.??The? company's balance sheet shows total assets of ?$71 ?million, total liabilities of??$26 ?million, and $5 million in preferred stock. The? firm's common stock is currently trading in the market...
Financial Learning Systems has 2.9 million shares of common stock outstanding and 61,410 shares of preferred...
Financial Learning Systems has 2.9 million shares of common stock outstanding and 61,410 shares of preferred stock.​ (The preferred pays annual cash dividends of ​$4.46 a​ share, and the common pays annual cash dividends of 19 cents a​ share.) Last​ year, the company generated net profit​ (after taxes) of $5,809,735. The​ company's balance sheet shows total assets of ​$72 ​million, total liabilities of $26 ​million, and $5 million in preferred stock. The​ firm's common stock is currently trading in the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT