Question

A fingmial aralyst wauts to me a unttiples model to atiniate the per value of a corporation stoik. - Tre cosporation has net imome of $120 villion - The conporation has sala veverue of $900 million - The covpovation has 60 vilfion shave The bemilimank puice-caming vatio is 20 Will the guen infornation. how would the aralyit corvatily animate a stock value per share with wuttipler wodel A finanial analyst wauts to ure a multiples mod al to atilusate the per value of a corporaficus stoik. - The corporation has net imome of \$120 willion the copporation has saler vererue of $900 million The compovation has 60 milion shave the beruhmank puice-caming vatio is 20 Wile the goven infornation. how would the analyit corvaltly atimate a stock value per shave with wuitiples wodel

Answer 1

To estimate the stock value per share, the corporation's net income is multiplied by the price-earnings ratio to find the market value, then divided by the number of shares. With a net income of $120 million and a price-earnings ratio of 20, the estimated market value is $2.4 billion. Dividing this by 60 million shares gives an estimated stock value per share of $40.

Step-by-step explanation:

To estimate the per share value of a corporation's stock using a multiples approach, one would need to apply the given benchmark multiple to a financial metric of the company. In this case, the benchmark price-earnings ratio is 20. The corporation has a net income (earnings) of $120 million. To find the estimated market value of the company, multiply the net income by the price-earnings ratio (20), which equals $2.4 billion ($120 million x 20).

Once we have the estimated market value, we calculate the estimated stock value per share by dividing the market value by the number of shares outstanding. The corporation has 60 million shares, so dividing $2.4 billion by 60 million gives us an estimated stock value per share of $40 ($2.4 billion / 60 million).