42、An analyst gathered the following information for a U.S. company whose common stock is currently priced at $40 per share:

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.

[此贴子已经被作者于2008-11-7 13:20:06编辑过]

42、An analyst gathered the following information for a U.S. company whose common stock is currently priced at $40 per share:

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.