You have been asked to assess whether Walgreen, a drugstore chain, is correctly priced relative to its
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You have been asked to assess whether Walgreen, a drugstore chain, is correctly priced relative to its competitors in the drugstore industry. The following are the price/sales ratios, profit margins, and other relative details of the firms in the drugstore industry.
Based entirely on a subjective analysis, do you think that Walgreen is overpriced because its price/sales ratio is the highest in the industry? If it is not, how would you rationalize its value?
Transcribed Image Text:
Profit PIS Margin Payout Expected Company Ratio (%) (%) Growth (%) 14.0 23.5 27.5 Beta 1.05 0.70 0.90 Arbor Drugs 0.42 3.40 18 Big B Drug 0.30 1.90 14 0.10 0.60 Emporium Fay's Genovese 0.15 1.30 37 0.18 1.70 26 11.5 10.5 6.0 12.5 10.5 13.5 0.90 0.80 0.90 1.10 0.90 1.15 1 Longs Drug 0.30 2.00 46 Perry Drugs 0.12 1.30 Rite-Aid Walgreen 0.33 3.20 37 0.60 2.70 31
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