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# Estimating the price of given stock

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You have the following information on Proctor & Gamble (PG) and Johnson & Johnson (JNJ):

PG: P-E (which is Price/EPS) = 22.42
JNJ: EPS = 3.14

a. Using PG as a comparable, estimate JNJ's price: ______________
b. The current price of JNJ is about \$69.50 per share. How does your estimate compare to the current price (high, low or about the same)? ___________________________
c. What is one problem with using a comparable (such as PG) to estimate the price of another firm (such as JNJ)?

https://brainmass.com/economics/finance/estimating-price-given-stock-509195

#### Solution Preview

a. Using PG as a comparable, estimate JNJ's price.

JNG Price=PE*EPS=22.42*3.14=70.40
We have used PE ratio of PG as it is comparable.

b. The current price of JNJ is about \$69.50 ...

#### Solution Summary

The solution describes the steps to estimate the price of given stock by using comparable. It also discusses the problems of using this method.

\$2.19