Question

You notice that​ Coca-Cola has a stock price of $ 40.47 and EPS of $ 1.87. Its competitor PepsiCo has EPS of $ 4.17. ​But, Jones​ Soda, a small batch​ Seattle-based soda producer has a​ P/E ratio of 34.3. Based on this​ information, what is one estimate of the value of a share of PepsiCo​ stock? One share of PepsiCo stock is valued at ​$ nothing.

Answer 1

Answer:

Value of share of Pepsi Co stock will be $90.2388

Explanation:

We have given stock price of coca-cola = $40.47

And EPS = $1.87

So $\frac{P}{E}$ ratio $=\frac{40.47}{1.87}= 21.64$

Pepsi Co stock EPS = $4.17

We have to find the share of Pepsi Co stock

Pepsi Co stock will be given by

Value of share of Pepsi Co stock = $EPS\times \frac{P}{E}ratio$

$=21.64\times 4.17= 90.2388$