The idea behind Answer is that a stock's price cannot be evaluated in isolation. The method of comparables refers to the valuation of an asset based on the multiples of

Answer $($such as a peer$-$group comparison$).$ For example, multiplying a benchmark value of the price$-$to$-$earnings $($P$/$E$)$ multiple by an estimate of a company's earnings per share $($EPS$)$ provides a quick estimate of the value of the company's stock that can be compared with the stock's market price. If Company A$\text{'}$s EPS is $$1\mathrm{.}50$ and an examination of benchmark firms in a peer$-$group comparison suggests a P$/$E of $22$ is appropriate, we will estimate that an appropriate price for Company A$\text{'}$s stock is $...$ that is$,.$ Similarly, multiplying a benchmark value of the price$-$to$-$sales $($P$/$S$)$ multiple by an estimate of a company's sales figure can provide an estimate of the company's stock value. If company $B$ has one billion shares outstanding and revenue of $$5$ billion, and the peer$-$group comparison suggests a $\frac{P}{S}$ of $3\mathrm{.}2$ is appropriate, we will estimate that an appropriate price for Company B$\text{'}$s stock is $...$ that is$,.$ The price$-$to$-$book $($P$/$B$)$ multiple can be used in a similar way. If the benchmark for Company C$,$ based on the peer$-$group, is $\frac{P}{B}=85\mathrm{.}0,$ and Company C$\text{'}$s balance sheet shows $$900$ million in total assets, $$500$ million in total liabilities, no preferred stock and eight hundred million shares of common stock outstanding, we will estimate that an appropriate price for Company C$\text{'}$s stock is $...$ that is$,$

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$22$ divided by $1\mathrm{.}50$

$3\mathrm{.}2$ times $(1$ billion divided by $5$ billion$)$

$$17\mathrm{.}00$

$$53\mathrm{.}13$

$$$95\mathrm{.}63$

$$42\mathrm{.}50$

$3\mathrm{.}2$ times $(5$ billion divided by $1$ billion$)$

:$\text{'}3\mathrm{.}2$ times $(5$ billion divided by $1$ billion$)$

:i $85\mathrm{.}0$ times $(500$ million divided by $800$ million$)$

:: $85\mathrm{.}0$ times $(900$ million minus $500$ million$)$

: $85\mathrm{.}0$ times $(900$ million divided by $800$ million$)$

:: $85\mathrm{.}0$ times $(900$ million minus $800$ million$)$ divided by $500$ million

:: $85\mathrm{.}0$ times $(900$ million minus $500$ million$)$ divided by $800$ million