Look up P/E and P/B ratios for Entergy (ticker symbol ETR), using Yahoo! Finance or another Internet source. Calculate the same ratios for the following potential comparables: American Electric Power (AEP), CenterPoint Energy (CNP), and Southern Company (SO). Set out the ratios in the same format as Table 4.1. Are the ratios for these electric companies tightly grouped or scattered? If you didn’t know Entergy’s stock price, would the comparables give a good estimate?

  

(Reference Table 4.1)

  

      

 

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Company Stock Price P/E P/B Comparable P/E P/B Dow (chemicals) $42.71 14.0 2.3 BASF 12.6 2.3 Celanese 6.4 3.0 Dupont 20.5 4.0 Eastman Chemical 10.1 2.7 PPG 13.4 4.9 Average 12.6 3.4 Union Pacific (railroad) $112 20.7 4.6 Canadian Pacific 33.2 4.9 CSX 18.7 3.1 Kansas City Southem 25.9 3.4 Norfolk Southern 16.0 2.5 Average 23.5 3.5 $103 Johnson & Johnson (health care and pharmaceuticals) 17.0 3.8 Astra Zeneca 85.3 4.3 Covidien 27.3 4.5 Merck 30.9 3.6 Novartis 21.1 3.1 Pfizer 18.9 2.5 Average Anadarko 24.6 3.6 Devon Energy (oil and gas) $54 10.0 1.0 n/a 1.8 Chesapeake Energy 21.5 0.9 Encana 3.1 0.9 EOG 15.3 2.6 Laredo Petroleum 8.3 0.8 Average 12.1 14 I TABLE 4.1 Stock price, price-earnings (P/E), and market-book (P/B) in December 2014. Selected companies are compared to potential comparables. Company Stock Price P/E P/B Comparable P/E P/B Dow (chemicals) $42.71 14.0 2.3 BASF 12.6 2.3 Celanese 6.4 3.0 Dupont 20.5 4.0 Eastman Chemical 10.1 2.7 PPG 13.4 4.9 Average 12.6 3.4 Union Pacific (railroad) $112 20.7 4.6 Canadian Pacific 33.2 4.9 CSX 18.7 3.1 Kansas City Southem 25.9 3.4 Norfolk Southern 16.0 2.5 Average 23.5 3.5 $103 Johnson & Johnson (health care and pharmaceuticals) 17.0 3.8 Astra Zeneca 85.3 4.3 Covidien 27.3 4.5 Merck 30.9 3.6 Novartis 21.1 3.1 Pfizer 18.9 2.5 Average Anadarko 24.6 3.6 Devon Energy (oil and gas) $54 10.0 1.0 n/a 1.8 Chesapeake Energy 21.5 0.9 Encana 3.1 0.9 EOG 15.3 2.6 Laredo Petroleum 8.3 0.8 Average 12.1 14 I TABLE 4.1 Stock price, price-earnings (P/E), and market-book (P/B) in December 2014. Selected companies are compared to potential comparables.

Answer rating: 100% (QA)

Priceearnings PE ratio measures the value o... View the full answer