Investors regard Sabin Electronics less favorably than other compa-nies in the industry. This is evidenced by the fact that they are willing to pay only 7.7 times current earnings for a share of Sabin’s stock, as compared to 12 times current earnings for other companies in the industry. If investors were willing to pay 12 times current earnings for Sabin’s stock, it would be selling for about $62.40 per share (12 × $5.20), rather than for only $40 per share.