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

Value of share of Pepsi Co stock will be $90.2388

Step-by-step explanation:

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

And EPS = $1.87

So
`(P)/(E)` ratio
`=(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* (P)/(E)ratio`

`=21.64* 4.17=$90.2388`