On a particular date, FedEx has a stock price of $ 88.55 and an EPS of $ 6.89. Its competitor, UPS, had an EPS of $ 0.42. What would be the expected price of UPS stock on this date, if estimated using the method of comparables?

The expected price of UPS stock is $5.397

Explanation:

The computation of the expected price of UPS stock is shown below:

= (FedEx stock price : FedEx EPS) * (UPS EPS)

= ($88.55 : $6.89) * $0.42

= $12.85 * $0.42

= $5.397

Since we have to compute the price of the UPS stock so divide the FedEx EPS and multiply the UPS EPS along with that, we do the comparison also.

By comparison, we get to know that UPS stock has only $5.39 stock price whereas FedEx has $88.55 stock price.