Relative details of the firms in the drugstore industry

Reference no: EM13963252

You have been asked to assess whether Walgreen, a drugstore chain, is correctly priced relative to its competitors in the drugstore industry. The following are the price/sales ratios, profit margins, and other relative details of the firms in the drugstore industry.

Company	P/S Ratio	Profit Margin	Payout	Expected Growth	Beta
Arbor Drugs	0.42	3.40%	18%	14.0%	1.05
Big B	0.30	1.90%	14%	23.5%	0.70
Drug Emporium	0.10	0.60%	0%	27.5%	0.90
Fay's	0.15	1.30%	37%	11.5%	0.90
Genovese	0.18	1.70%	26%	10.5%	0.80
Longs Drug	0.30	2.00%	46%	6.0%	0.90
Perry Drugs	0.12	1.30%	0%	12.5%	1.10
Rite-Aid	0.33	3.20%	37%	10.5%	0.90
Walgreen	0.60	2.70%	31%	13.5%	1.15

Based entirely on a subjective analysis, do you think that Walgreen is overpriced because its price/sales ratio is the highest in the industry? If it is not, how would you rationalize its value?

Reference no: EM13963252

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