The price to
earnings multiple compares a stock's price to its forward earnings per share.
The trailing
earnings multiple at offer was in the low-to-mid teens and at a discount when compared to Kuwait's Index multiple of 16x.
Over 60 per cent of the price gains seen in local stock markets over the last year are the result of
earnings multiple expansion -- meaning local markets would suffer in an environment when
earnings multiples are contracting.
The shares are trading on a prospective
earnings multiple of 7.6 times.
In a research note, it says at the current market price of $0.380, the stock is trading at a price
earnings multiple of 6.70 times on its last year's earnings and at a price to book value multiple of 0.86 times.
Cardinal's medical products business has been the shining part of the company, and the spinoff could garner an
earnings multiple closer to competitors like Baxter International Inc.
A common multiple of earnings is a price to
earnings multiple, or P/E ratio.
The resulting value estimate from the income approach using market comparables to develop the
earnings multiple is $24 million ($2.4 million x 10).
The model assumes that a firm's equity value equals an
earnings multiple times permanent earnings, where risk is one of many determinants of the
earnings multiple.
Regarding its "strong buy" assessment, Jaffray said "We believe that as investors regain confidence in Redhook's strategy and ability to execute, the
earnings multiple of Redhook shares should expand to a level more in line with our long-term earnings growth estimate of 30%"
The price of a company's stock is related to several factors that are summarized in two numbers, earnings per share, E, and a price
earnings multiple, M.
This vulnerability of the health care group may be related to the high price
earnings multiple. Several stocks were priced at over 20 times expected 1992 earnings earlier in the year.
