Question

Given the information below for Seger Corporation, compute the expected share price at the end of 2017 using price ratio analysis. Assume that the historical average growth rates will remain the same for 2017. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Year	2011		2012		2013		2014		2015		2016
Price	$	106.50	$	112.40	$	111.10	$	108.60	$	130.10	$	145.50
EPS		3.40		4.11		4.91		5.61		8.00		9.00
CFPS		8.27		9.04		9.31		11.12		12.40		13.50
SPS		62.60		67.60		67.00		70.50		81.70		89.70

Answer 1

	Year	2011	2012	2013	2014	2015	2016
i	Price	106.5	112.4	111.1	108.6	130.1	145.5
ii	EPS	3.4	4.11	4.91	5.61	8	9
iii	CFPS	8.27	9.04	9.31	11.12	12.4	13.5
iv	SPS	62.6	67.6	67	70.5	81.7	89.7
	using PE Ratio
	Year	2011	2012	2013	2014	2015	2016	total	Average
v=i/ii	PE ratio	31.32	27.35	22.63	19.36	16.26	16.17	133.09	22.18
vi	EPS growth rate		20.88%	19.46%	14.26%	42.60%	12.50%	110%	21.94%
	Expected price =		=22.18*9*1.2194		$ 243.42
	Using P/CFPS ratio
	Year	2011	2012	2013	2014	2015	2016	total	Average
	P/CFPS ratio	12.88	12.43	11.93	9.77	10.49	10.78	68.28	11.38
	CFPS growth rate		9.31%	2.99%	19.44%	11.51%	8.87%	52%	10.42%
	Expected price =		=11.38*13.5*1.1042			$ 169.64
	Using P/SPS value ratio
	Year	2011	2012	2013	2014	2015	2016	total	Average
	P/SPS	1.70	1.66	1.66	1.54	1.59	1.62	9.78	1.63
	SPS growth rate		7.99%	-0.89%	5.22%	15.89%	9.79%	38%	7.60%
	Expected price =		=1.63*89.7*1.0760			157.32