Valuation Relative to Own Historical P/Es.
As of the beginning of 2001, you are valuing the Bank of Nova Scotia (TSE:BNS.TO), Canada’s fourth largest bank in terms of assets. You are investigating the method of comparables using BNS.TO’s five year average PIE as the benchmark value of the multiple. Table 4 8 presents the data.
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TABLE 4 8 Historical P/Es for BNS.TO |
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2000 |
1999 |
1998 |
1997 |
1996 |
Overall Mean |
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Average annual P/E |
9.7 |
11.1 |
12.8 |
11.0 |
8.0 |
10.5 |
1. State a benchmark value for BNS.TO’s PIE.
2. Given 2000 EPS of CAD3.55, calculate a justified price for BNS.