Company Lagrange has three close peers whose current stock prices per share (P) and NTM EPS...
Company Lagrange has three close peers whose current stock prices per share (P) and NTM EPS values are as follows. Peer 1: P = $60, EPS = $7; Peer 2: P = $70, EPS = $8; Peer 3: P = $80, EPS = $9. Lagrange's NTM EPS = $10. What should be its share price based on the maximum PE multiple of its three close peers?
Homework Answers
PE Ratio of Peer 1 = 60/7 = 8.57
PE Ratio of Peer 2 = 70/8 = 8.75
PE Ratio of Peer 3 = 80/9 = 8.89
EPS of NTM = $10
Price of NTM = 10(8.89)
Price of NTM = $88.90
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