Sunset Corp. currently has an EPS of $3.85, and the benchmark PE for the company is 19.
Question:
Sunset Corp. currently has an EPS of $3.85, and the benchmark PE for the company is 19. Earnings are expected to grow at 6 percent per year.
a. What is your estimate of the current stock price?
b. What is the target stock price in one year?
c. Assuming the company pays no dividends, what is the implied return on the company’s stock over the next year? What does this tell you about the implied stock return using PE valuation?
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a Using the equation to calculate the price of a share of stock with the PE ratio P ...View the full answer
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Related Book For
Essentials of Corporate Finance
ISBN: 978-1260013955
10th edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
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