Question

National City, a bank holding company, reported earnings per share of $2.40 and paid dividends per share of $1.06.Theearningshadgrown7.5%ayearovertheprior five years, and were expected to grow 6% a year in the long run. The stock had a beta of 1.05 and traded for ten times earnings. The Treasury bond rate was 7%.
a. Estimate the P/E ratio for National City.
b. What longterm growth rate is implied in the firm’s current PE ratio?


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  • CreatedApril 15, 2015
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