Valuation Using Price-Earnings Multiples The Claremont Company is planning an initial public offering (IPO) and management would like to have an idea of an appropriate price to charge for a share of its stock. The company plans to issue 100,000 shares. The Claremont Company's most recent earnings per share (EPS) are $1.65; however, the consensus forecast among analysts who follow the company is for EPS to be $1.85. The EPS and share price of four comparable firms are shown below: Firm EPS Share Price P/E ratio A $1.00 $18.00 18 0.60 10.00 2:20 B C D 13.20 140.00 57.20 22 14 26 Compute the value of a share of Claremont Company stock using the price-earnings multiples method Trailing P/E multiple valuation S Forward P/E multiple valuation S Check 27 X 31 M

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