Suppose that the average P/E multiple in the oil industry is 22. Exxon is expected to have an EPS of $1.50 in the coming year. The intrinsic value of Exxon stock should be
A) $33.00.
B) $35.55.
C) $63.00.
D) $72.00.
E) None of the options are correct.

Question

Quizplus · Accepted Answer

The intrinsic value of Exxon stock is $33.00, which is calculated by multiplying the expected EPS of $1.50 by the average P/E multiple of 22.

Suppose That the Average P/E Multiple in the Oil Industry