A company has a P/E ratio of 18 with an earnings growth rate of 20%. The...

 

Transcribed Image Text:

A company has a P/E ratio of 18 with an earnings growth rate of 20%. The S&P 500's P/E is 15 with an earnings growth rate of 10%. a. Give an argument as to why the company is cheap relative to the market. b. Give an argument as to why the company is expensive relative to the market. A company has a P/E ratio of 18 with an earnings growth rate of 20%. The S&P 500's P/E is 15 with an earnings growth rate of 10%. a. Give an argument as to why the company is cheap relative to the market. b. Give an argument as to why the company is expensive relative to the market.

Answer rating: 100% (QA)

a Argument for the company being cheap relative to the market The companys PE ratio of 18 is higher than the markets PE ratio of 15 However when consi... View the full answer