Question

You notice that​ Coca-Cola has a stock price of $ 41.42 and EPS of $ 1.74. Its competitor PepsiCo has EPS of $ 4.04. ​But, Jones​ Soda, a small batch​ Seattle-based soda producer has a​ P/E ratio of 33.9. Based on this​ information, what is one estimate of the value of a share of PepsiCo​ stock?

Answer 1

Answer:

The estimate value of share of PepsiCo stock is  $96.152

Explanation:

Given,

Stock Price of Coca- Cola (MPS which is Market Price per share) is $41.42

EPS (Earnings Per Share) is $1.74

Putting the values in the P/E ratio, for computing the P/E ratio as:

P/E ratio = MPS / EPS

= $41.42 / $1.74

= 23.80

Jones Soda P/E ratio is 33.9

PepsiCo stock EPS is $4.04

Computing the estimate value of share of PepsiCo stock is as:

Value of share pepsico stock = EPS × P/ E ratio

= $4.04 × 23.80

= $96.152