JetBlue Airways Corporation stock has an EPS that has ranged from a low of ($0.37) to a high of $0.36 per share in the past five years from 2006 to 2010. Based on this historical data and expected economic and industry conditions, let’s assume that the expected EPS will be $0.20 per share going forward. The price earnings ratio of the industry can be obtained from various sources, such as Moody’s, Standard & Poors (S&P) or Finance.Yahoo.com. A recent P/E for the industry was around 22. Based on these assumptions, JetBlue stock would trade at $0.20 x 22 or $4.40. A recent stock price as of the time of this analysis was $5, so this was a reasonable approximation.”
Using the price/earnings multiple approach, calculate the stock price of a pubic company, preferably one in the aviation business and provide the following information:
1)Research the EPS for the past five years, including quarterly results from the current year.
2)Estimate the future EPS. Use this information along with research that you conduct from at least 2 articles about the company’s recent financial performance (within the past year). This information can be from the Wall Street Journal, New York Times, company press releases or other verifiable source.
3)Determine the industry P/E for the industry using either Moody’s, S&P, Finance.Yahoo or by calculating the P/E for three competitor firms and using an average of the three values.
4)Calculate the expected price of the stock and compare this price to the most recent market price.
5)Explain any significant differences.
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