May Stewart, CFA, a retail analyst, is performing a P/E-based comparison of two hypothetical jewelry stores as of early 2009. She has the following data for Hallwhite Stores (HS) and Ruffany (RUF).

HS is priced at $44. RUF is priced at $22.50.

HS has a simple capital structure, earned $2.00 per share (basic and diluted) in 2008, and is expected to earn $2.20 (basic and diluted) in 2009.

RUF has a complex capital structure as a result of its outstanding stock options. Moreover, it had several unusual items that reduced its basic EPS in 2008 to $0.50 (versus the $0.75 that it earned in 2007).

For 2009, Stewart expects RUF to achieve net income of $30 million. RUF has 30 million shares outstanding and options outstanding for an additional 3,333,333 shares.

A.) Which P/E (trailing or forward) should Stewart use to compare the two companies valuation?

B.) Which of the two stocks is relatively more attractive when valued on the basis of P/Es (assuming that all other factors are approximately the same for both stocks)?