42、An analyst gathered the following information for a U.S. company whose common stock is currently priced at $40 per share: | 2002 | 2003 | 2004 | 2005 | 2006 | Earnings per share ($) | 1.16 | 0.62 | 1.28 | 1.60 | (1.30) | Book value per share ($). | 8.48 | 8.92 | 16.04 | 19.28 | 16.30 | Return on equity | 14% | 7% | 8% | 8% | |
Because of the severe cyclical contraction that occurred in 2006 for a major segment of the company's operations, the analyst has decided to normalize earnings using the 2002-2005 period. If the analyst also decides to account for changes in the company's size over time, the most appropriate estimate of the company's 2006 price/earnings (P/E) ratio based on normalized earnings is: A. 22.5. B. 26.5. C. 34.3. D. 59.5.
Correct answer = B
"Introduction to Price Multiples," John D. Stowe, Thomas R. Robinson, Jerald E. Pinto, and Dennis W. McLeavey
2008 Modular Level I, Vol. 5, pp. 204-210
Study Session 14-61-b
calculate and interpret P/E, P/BV, P/S, and P/CF
Using average ROE provides a better estimate of P/E when a company's size has changed. The average ROE is 9.25; an estimate of normal earnings per share can be derived by multiplying average ROE by ending book value per share:
0.0925 x 16.30 per share = $1.51 normal earnings per share. | 
发表于 2008-5-27 15:02
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