Find 3 firms that can serve as comparables for your firm. Prepare a PowerPoint presentation

June 1, 2016

Question
Find 3 firms that can serve as comparables for your firm. Prepare a PowerPoint presentation to do the following:

Explain why you selected these firms.
Explain why the comparable firms are not identical to your firm.
Calculate and present the PE ratio for each of the comparable firms and your firm.
THE FIRM I CHOSE WAS WAL-MART
The work asked by the assignment is found in Ch. 16, especially section 16.4 which gives an example. You first find three companies which are comparable to yours. What makes these 3 firms comparable is that they should be in the same line of business as your firm, have similar earnings growths, similar capital structures, etc, as described in the chapter. Once you have identified which 3 firms are your comparables, you calculate their average P/E ratio. Then you multiply that average by the Earnings Per Share of your company and that gives you the price of your company’s stock. As I said, it’s all in Ch. 16.