Estimate compare to the current price


You have the following information on Target and Wal-Mart:

Target: P-E (which is Price/EPS) = 14.87
Wal-Mart: EPS = 15.42

Q1. Using Target as a comparable, estimate Wal-Mart's price

Q2. The current price of Wal-Mart is about $54 per share. How does your estimate compare to the current price (high, low or about the same)?

Q3. What is one problem with using a comparable (such as Target) to estimate the price of another firm (such as Wal-Mart)?

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Finance Basics: Estimate compare to the current price
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