Energy Resources generated an EPS of $3.13 over the last 12 months. The company's earnings are expected togrow by 29.6% next year, and because there will be no significant change in the number of shares outstanding, EPSshould grow at about the same rate. You feel the stock should trade at a P/E of around 35 times earnings. Usethe P/E approach to set a value on this stock.***Using the P/E approach, the value on this stock is $ (Round to the nearest cent.)

Earning per share is a kind of ratio that is used to determine the company's profitability.…

Answered: Energy Resources generated an EPS of…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

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Backyard Company is expected to pay a dividend of $L4 per share in the coming year. The required rate of return on the share is equal to 12% and dividends are expected to grow at the rate of 4% per year. Calculate the current value (price) of the stock. Note: Include two decimal points in your answer. Answer: Give your reasons
A firm is expected to pay a dividend of $3.35 next year and $3.65 the following year. Financial analysts believe the stock will be at their price target of $110 in two years.Compute the value of this stock with a required return of 12.7 percent. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Value of Stock: ______.__
You have found the following historical information for the Daniela Company over the past four years: Year 1 Year 2 Year 3 $ 51.60 $ 60.92 $ 70.14 3.08 Year 4 $ 63.75 3.27 2.68 2.80 Stock price EPS Earnings are expected to grow at 15 percent for the next year. Using the company's historical average PE as a benchmark, what is the target stock price one year from today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Target stock price $
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If you look at stock prices over any year, you will find a high and low stock price for the year. Instead of a single benchmark PE ratio, we now have a high and low PE ratio for each year. We can use these ratios to calculate a high and a low stock price for the next year. Suppose we have the following information on a particular company over the past four years: Year 1 Year 2 Year 3 Year 4 High price $ 99.70 $ 123.30 $ 132.70 $ 149.33 Low price 74.53 90.64 71.32 117.85 EPS 8.98 10.73 11.81 13.20 Earnings are projected to grow at 9 percent over the next year. a. What is your high target stock price over the next year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is your low target stock price over the next year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
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ALPHO Inc. has paid annual dividends of $1.25 and $1.62, over the past two years. Dividends in the future are expected to be $2.00 and $2.45 over the next two years, then grow at a constant rate of 4%. Which one of the following formulas should be used to compute the value of the stock today? P0= D1/(1+k)1+ D2/(1+k)2 + ... + Dn/(1+k)n + Pn/(1+k)n P0= D/k P0= D1/(1+k)n+ g P0= D1/(k-g)

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