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Creative Toys recently paid a dividend and has a payout ratio of 67% and ROE of 23% with expected future earnings and dividend growth of 7.6%. Given shareholders require a 14% return, the justified price to book value multiple is closest to the given value. Consumer Products has a trailing P/E lower than its peer group median, so it is undervalued. Party Favors has a leading P/E and growth rate, and its PEG ratio of 0.82 is below the peer group median of 0.92, so it is undervalued.

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403 views4 pages

1

Creative Toys recently paid a dividend and has a payout ratio of 67% and ROE of 23% with expected future earnings and dividend growth of 7.6%. Given shareholders require a 14% return, the justified price to book value multiple is closest to the given value. Consumer Products has a trailing P/E lower than its peer group median, so it is undervalued. Party Favors has a leading P/E and growth rate, and its PEG ratio of 0.82 is below the peer group median of 0.92, so it is undervalued.

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bando007
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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• Creative Toys recently paid a dividend of $1.35 a share.

It has a
payout ratio of 67%, a ROE of 23%, and an expected growth rate in
earnings and dividends for the foreseeable future of 7.6%.
Shareholders require a return of 14% on their investment. The
justified price to book value multiple is closest to:
• Consumer Products, Inc. has a trailing P/E of 27.52, while the median
peer group P/E is 33.25. Assuming that there are no differences in the
fundamentals among the peer firms and Consumer Products, the firm
is:
• A. correctly valued.
• B. overvalued.
• C. undervalued.
• Party Favors, Inc. has a leading P/E of 18.75 and a 5-year consensus
growth rate forecast of 15.32%. The median PEG, based on leading
P/E, for a group of companies comparable in risk to Party Favors, Inc.
is 0.92. The stock appears to be:
• A. overvalued because its PEG ratio is 0.82.
• B. overvalued because its PEG ratio is 1.22.
• C. undervalued because its PEG ratio is 0.82.

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