Macmillan Learnin Use the given data for Nordstrom to estimate the values for a comparable department store, Macy's. Nordstrom: Stock price per share (July 2018) $50.71 Earnings per share (quarter ending July 2018) $0.97 Book value per share (quarter ending July 2018) $6.81 a. Macy's book value per share was $19.27. If Macy's has the same price-to-book value as Nordstrom, what is the value of Macy's stock? Value of Macy's stock: $ b. Macy's earnings per share was $0.54. If Macy's has the same price-to-earnings ratio as Nordstrom, what is the value of Macy's stock? Value of Macy's stock: $ e. The actual price of Macy's stock as of July 2018 was $36.54. What does this imply about the valuation techniques considered in this problem? Both methods yield a value within 25% of the actual value.
Macmillan Learnin Use the given data for Nordstrom to estimate the values for a comparable department store, Macy's. Nordstrom: Stock price per share (July 2018) $50.71 Earnings per share (quarter ending July 2018) $0.97 Book value per share (quarter ending July 2018) $6.81 a. Macy's book value per share was $19.27. If Macy's has the same price-to-book value as Nordstrom, what is the value of Macy's stock? Value of Macy's stock: $ b. Macy's earnings per share was $0.54. If Macy's has the same price-to-earnings ratio as Nordstrom, what is the value of Macy's stock? Value of Macy's stock: $ e. The actual price of Macy's stock as of July 2018 was $36.54. What does this imply about the valuation techniques considered in this problem? Both methods yield a value within 25% of the actual value.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Use the given data for Nordstrom to estimate the values for a comparable department store, Macy's.
Nordstrom:
Stock price per share (July 2018)
$50.71
Earnings per share (quarter ending July 2018)
$0.97
Book value per share (quarter ending July 2018)
$6.81
a. Macy's book value per share was $19.27. If Macy's has the same price-to-book value as Nordstrom, what is the value of
Macy's stock?
Value of Macy's stock: $
b. Macy's earnings per share was $0.54. If Macy's has the same price-to-earnings ratio as Nordstrom, what is the value of
Macy's stock?
Value of Macy's stock: $
e. The actual price of Macy's stock as of July 2018 was $36.54.
What does this imply about the valuation techniques considered in this problem?
Both methods yield a value within 25% of the actual value.
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