Calculating a Leading PIE Ratio (2).
In Example 4 2, we calculated a normalized EPS for Koninklijke Philips (NYSE:PHG) and a PIE based on normalized EPS. In this example, we compute leading PIES for PHG using alternative definitions. Table 4 3 presents PHG’s actual and forecasted EPS, which reflect a severe downturn in its Consumer Electronics division.
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TABLE 4 3 Quarterly EPS for PHG (in US Dollars, excluding nonrecurrina items) |
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31 March |
30 June |
30 September |
31 December |
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2001 |
0.08 |
(0.34) |
(0.27) |
E0.00 |
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2002 |
E(0.05) |
E0.010 |
E0.15 |
E0.03 |
On 8 November 2001, PHG stock closed at $25.72. PHG’s fiscal year ends on 31 December. As of 8 November 2001, solve the following problems using the information in Table 4 3:
1. Calculate PHG’s leading PIE based on the next four quarters of forecasted EPS.
2. Calculate PHG’s leading PIE based on a fiscal year definition and current fiscal year (2001) forecasted EPS.
3. Calculate PHG’s leading PIE based on a fiscal year definition and next fiscal year (2002) forecasted EPS.