An investor is considering buying shares of XYZ limited. He has identified three companies that are in the same…

An investor is considering buying shares of XYZ limited. He has identified three companies that are in the same…

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An investor is considering buying shares of XYZ limited. He has identified three companies that are
in the same industry as XYZ. Data for the companies are shown below:
Comparable company data
Current stock price
Earnings Per Share
XYZ
?
Sh. 1.75
Comparable 1
Sh. 54
Sh. 2.8
Required
Calculate the share price for XYZ Limited (2 marks)
Comparable 2
Sh. 36.5
Sh. 2.1
Comparable 3
Sh. 108.2
Sh. 6.5

Expert Answer:

Answer rating: 100% (QA)

Let s calculate the average P E ratio first P E ratio of Comparable
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