Beagle Beauties engages in the development, manufacture, and sale of a line of c

Question

Beagle Beauties engages in the development, manufacture, and sale of a line of cosmetics designed to make your dog look glamorous. Below you will find selected information necessary to compute some valuation estimates for the firm. Assume the values provided are from year-end 2015. Also assume that the firm's equity beta is 1.40, the risk-free rate is 2.05 percent, and the market risk premium is 6.1 percent. $ 2.28 Dividends per share Return on equity Book value per shar 8.50% $17.15 2015 value per share Average price multiple Forecasted growth rate Earnings Cash Flow Sales $ 5.20 6.70 $25.75 2.44 13.30 13.52% 9.48 11.51% 7.46% Using the P/E, P/CF, and P/S ratios, estimate the 2016 share price for Beagle Beauties.| (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Explanation / Answer

2015- EPS = 5.20

2015 - Cash Flow per share = 6.7

2015 - Sales per share = 25.75

2016 EPS = 5.2*(1+13.52%) = 5.90304

Price in 2016 as per PE multiple = 5.90304* 13.3 = 78.51

2016 Cash Flow per share =6.7*(1+11.51%) = 7.47117

Price in 2016 as per P/CF ratio = 9.48* 7.47117 = 70.82

2016 Sales per share = 25.75*(1+7.46%) = 27.67095

Price in 2016 as per P/Sales ratio = 27.67095* 2.44= 67.51

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