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Price-to-Earnings (P/E) Ratio

Calculating ROE and P/E Ratio

A) Raleigh Corp's total common equity at the end of last year was $300,000 and its net income after taxes was $55,000. What was its ROE? B) Rutland Corp's stock price at the end of last year was $30.25 and its earnings per share for the year were $2.45. What was its P/E ratio?

Growth Rate in Residual Earnings Implied by P/E

3. Lyons, Inc. earned $472 million in 2007 on a beginning book value of common equity of $2,200 million. The firm paid no dividends and had no stock transactions during 2007. The required return for its equity is 11%. At the end of 2007, its shares traded at a trailing P/E of 12.8. A. What growth rate in future residual ear

State whether you would expect them to distribute a relatively high or low proportion of current earnings and whether you would expect them to have a relatively high or low price-earnings ratio.

Dividend Policy. For each of the following four groups of companies, state whether you would expect them to distribute a relatively high or low proportion of current earnings and whether you would expect them to have a relatively high or low price-earnings ratio. a. High-risk companies. b. Companies that have recently exper

Price-earnings ratio

Trying to find the price-earnings ratio for the following. Thanks! JE, Inc has $6,400 in sales. The profit margin is 4 percent. There are 6,400 shares of stock outstanding. The market price per share is $1.20. What is the price-earnings ratio?

Price/earnings (P/E) ratios:

Question 13 Price/earnings (P/E) ratios: a. reflect the amount investors are willing to pay for each dollar of earnings. b. can be calculated using either forecast or historical earnings per share. c. can be estimated by dividing the firm's payout ratio by the difference between the required retu

PE ratios and market-to-book ratios questions

I know most of these answers but I want your expertise to confirm what I know is right; can anyone please help with the following questions? 1- How can a company with a high ROE have a low PE ratio? 2- What type of companies have: a. a high PE ratio and a low market-to-book ratio? b. a high PE ratio and a high market

Dividend Policy

For each of the following four groups of companies, state whether you would expect them to distribute a relatively high or low proportion of current earnings and whether you would expect them to have a relatively high or low price-earnings ratio. a. High-risk companies. b. Companies that have recently experienced a temporary d

Valuation and P/E

James Preston, the chief financial officer of Preston Resources, has been asked to do an evaluation of Dunning Chemical Company by the president and Chair of the Board, Sharon John. Preston Resources was planning a joint venture with Dunning (which was privately traded), and Sharon and James needed a better feel for what Dunning

Payout ratio/ Plowback ratio conclusion

P/E Ratios. Web Cities Research projects a rate of return of 20 percent on new projects. Management plans to plow back 30 percent of all earnings into the firm. Earnings this year will be $2 per share, and investors expect a 12 percent rate of return on the stock. a- What is the sustainable growth rate? b- What is the stoc

P/E ratio for valuing firms

Many experts suggest that the PE ratio is an obsolete way to value firms. Why do they say that and what alternatives exist? Use the Library or other Web resources to find examples that support your answer.

EPS and PE

R and R company currently has net income of $3 million and 1. million common shares outstanding which sell for $20 per share. R and R has decided to issue new stock to raise $4,000,000 to expand its operations. Rand R investment banker will sell the new shares for $18 per share with a spread of 7%. There will be a $60,000 reg

Calculating Dividends, Book Value, PE Ratio

A and B, Inc. is primarily engaged in the worldwide production, processing, distribution, and marketing of food products. The following information is from its 2003 annual report: 2003 2002 Earnings per share $1.08 $1.14 Cash dividends per common share $0.80 $0.76 Market price per common share $12.94 $15.19 Com

Price Earning ratios

P/E ratios are a useful indicator and tool when performing valuation and comparing firms. List three factors that should be considered or adjusted for when comparing P/E ratios among different firms.

Effect on the corporations EPS and PE ratio

The corporation is evaluating an extra dividend vs. a share repurchase. In either case, $13,000 would be spent. Current earnings are $2.60 per share and the stock currently sells for $60 per share. There are 800 shares outstanding. Ignore taxes and other imperfections. I need help with determining the effect on the price per

Elgin Electronics: External Factors and Price-Earnings Ratio

When Elgin Electronics was floated on the market six years ago it was recognised as a growth company, with significant opportunities as a growth company, with significant opportunities for profitable investment. Its profits performance has been in line with performance but its price earnings ratio has fallen over the last three

Price Earnings Ratios: Example Problem

The price earnings ratios on Feb 8th 2006 for five companies traded on the London Stock Exchange are listed below. All the companies are quite well know and involved in retailing in the UK. Discuss the factors that might explain the differences between these price earnings ratios. Company Price/Earnings Ratio Boots 19.9 J

Securities analysis: P/E ratio

Please help answer the following problems. Provide explanations for each. Markowitz's main contribution to portfolio theory is: a. that risk is the same for each type of financial asset. b. that risk is a function of credit, liquidity and market factors. c. risk is not quantifiable. d. insight about the relat

Differences between these price earnings ratios

Please help with the following problem: Valuation of a Company's Shares The price earnings ratios on Feb 8th 2006 for five companies traded on the London Stock Exchange are listed below. All the companies are quite well know and involved in retailing in the UK. Discuss the factors that might explain the differences betw

Dividened policy - P/E Ratio

Please help with the following problem. Please provide references as part of your solution. Using a current share price of quoted stock , prepare a short report that would give information about company's dividened policy and the price earning ratio currently. Please use current price of Ansoft Corporation "Ticker ANST "

Regression to estimate Industry P/E ratios while controlling

A. Use a regression to estimate Industry P/E ratios while controlling for risk, growth and payout. Choose and justify your choice of which P/E ratio you estimate. Do you recommend manipulating this data in any way prior to your estimation? b. Your boss, the research director, wants his analysts to concentrate on companies

P/E Ratios

Castor Corp. and Pollux Corp. each have 100 million shares and earnings per share of $2. Castor has a P/E ratio of 20, while Pollux has a P/E ratio of 15. Castor makes an offer to acquire Pollux, offering .80 shares of Castor for each share of Pollux; the offer is accepted by Pollux shareholders. Suppose that the combined firm (

Stock Price

46. The company has been hit hard due to increased competition. The co.'s analysts predict that earnings (and dividends) will decline at a rate of 5% annually forever. Assume that ks = 11% and Do = $2. What will be the price of the co's stock 3 year from now? 27.17 6.23 28.50 11.88 20.63