Calculate price-to-sales and price-earnings

Reference no: EM131192144

Problem - The following are some key accounting numbers and market values (in thousands) for Target Corporation and Wal-Mart Corporation for 2014 (year ending in 2015) from Yahoo Finance. These two retailers are considered to be comparable to Costco, Inc.

$ thousands	Year End	Sales	Earnings	Book Value	Market Value
Target Corporation	1/31/2015	$72,618,000	($1,636,000)	$13,997,000	$51,700,000
Walmart Corporation	1/31/2015	$485,651,000	$16,636,000	$76,255,000	$233,100,000

Required:

a) Calculate price-to-sales, price-earnings (P/E) and price-to-book (P/13) ratios for Target and Wal-Mart.

b) Costco reported the following numbers (in thousands) for fiscal year 2014:

$ thousands	Year End	Sales	Earnings	Book Value
Costco, Inc.	8/31/2014	$112,640,000	52,058,000	$12,303,000

Apply multiples for Target and Wal-Mart to price Costco's 439.49 million outstanding shares. Is it a "good" buy? The current price of Costco is $137.95 as of 6/16/15.

Reference no: EM131192144

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