Question: David is evaluating the stock of Cube Constructors, which is currently trading at $34 per share. He gathers the following information regarding the company: Sales

David is evaluating the stock of Cube Constructors, which is currently trading at $34 per share. He gathers the following information regarding the company: Sales per share = $9.71 Long-term profit margin = 11.50% Dividend payout ratio = 35% Earnings growth rate = 9% Required rate of return on equity = 10% Perform calculation of the justified P/S multiple and suggest whether the stock is under-, over- or fairly valued. Show your calculations

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To calculate the justified pricetosales PS multiple we can use the Gordon Growth Model which is comm... View full answer

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