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Beta - The book value of the shares is $ 23.73 which is...

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Beta Average return on common equity (ROE) for past five years, Book value, Debt to equity Price-to-earnings ratio (P/E) Beta – 0.47 (as on 21 st June 2011) Average return on common equity – 12 % Book Value – 23.73 (as on 21 st June 2011) Debt to Equity Ratio – Total Debt: 16,478,875 Total Equity – 2,023,464 Therefore, Debt to Equity Ratio –8.14 (As per Annual Report 2010) Price to earnings ratio – 15.29 (As on 21 st June 2011) The beta of the company is 0.47 i.e. it is a defensive stock and does not move exactly the same as the market does. The low beta indicates that the stock fluctuation is not totally dependent on the market factors. The average return on common equity is 12%, which is a moderate rate of return as per the risk benefit analysis concerning the equity holders of the company. Though the debt equity ratio is very high, the company is not able to trade on equity by using the debt financing aggressively.
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Unformatted text preview: The book value of the shares is $ 23.73 which is good intrinsic value per share to support the claims of the common stock holders to support their claim in case of liquidation. The firm is a highly levered firm as most of funding is being done through debt. The debt equity ratio of the firm is almost 8: 1 that is way above the market standards of 2: 1. The firm is trying to benefit from the theory of trading on equity. The price / earnings ratio of the company 15.29 times i.e. its market value per share is more than 15 times the earnings per share of the company. It can be said that the P/E multiple of the company is very high and the value may not be represent the correct value based on the book value per share of the company. Source: http://finance.yahoo.com/q?s=CBSH http://www.google.com/finance?q=NASDAQ:CBSH...
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