What is a reasonable Earnings per Share value for a manufacturing firm a couple of years since their IPO?
2006-08-05 18:59:42 · 5 answers · asked by balans_99 2 in Business & Finance ➔ Investing
EPS defined as NetProfit/NumberOfShares
2006-08-05 19:22:45 · update #1
If you mean reasonable for the investor, surely this depends on the price paid for each share.
2006-08-05 19:07:16 · answer #1 · answered by Anonymous · 0⤊ 0⤋
I dont believe there is a suitable answer for what is classed as a "reasonable" EPS. If you generalise and assume that the P/E value of the firm is 10 what difference would it make if the firm has earnings of 100 and has a 100 shares giving an EPS of 1 and a price of 10 as opposed to 50 share and and having an EPS of 2 with a price equal to 20. Since the market capitalisation of the firm is unchanged there would be no benefit in having a target or "reasonable" EPS.
2006-08-06 05:59:21 · answer #2 · answered by Damien A 2 · 0⤊ 0⤋
I think it should have return on investment at least 2% more than what maximum govt. bonds are offering.
govt. bonds are safe, IPOs are not, so as per the basics of financial engineering 2% should be added to cover the risk otherwise why some one would invest?
2006-08-05 19:23:52 · answer #3 · answered by mukesh padhya 3 · 0⤊ 0⤋
maybe 4 or 5% of the share price or more.
2006-08-05 19:15:12 · answer #4 · answered by Judy 7 · 0⤊ 0⤋
no idea
2006-08-05 21:07:26 · answer #5 · answered by Anonymous · 0⤊ 0⤋