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PE ratio for comparable firms and Costco

Use comparable firms for a PE analysis.

Find three firms that can serve as comparables for COSTCO WHOLESALE CORPORATION to:

Explain why you selected these firms.
Explain why the comparable firms are not identical to your firm.
Calculate and present the PE ratio for each of the comparable firms and Costco wholesale corporation.

Solution Preview

Use comparable firms for a PE analysis.

Find three firms that can serve as comparables for COSTCO WHOLSALE CORPORATION to: Explain why you selected these firms. Explain why the comparable firms are not identical to your firm. Calculate and present the PE ratio for each of the comparable firms and Costco wholesale corporation.
Price to Earning ratio indicates the confidence of market towards the company. It is calculated by Market price per share/ Earnings per share.
As per Investopedia "The P/E is sometimes referred to as the "multiple", because it shows how much investors are willing to pay per dollar of earnings. If a company were currently trading at a multiple (P/E) of 20, the ...

Solution Summary

Response provides the steps to compute the PE ratio for each of the comparable firms and Costco wholesale corporation

$2.19