About the implicit stock return using pe valuation

Assignment Help Financial Management

Reference no: EM131016187

Stock Valuation and PE. Sully Corp. currently has an EPS of $2.35, and the benchmark PE for the company is 21. Earnings are expected to grow at 7 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 implicit stock return using PE valuation?

Reference no: EM131016187

Questions Cloud

Compute the annual payment for the loan : Preston Corporation is considering whether to borrow funds and purchase an asset or to lease the asset under an operating lease arrangement. If the company purchases the asset, the cost will be $110,000. Compute the aftertax cost of the leases for t..

Disadvantages of models used to assess risk exposure : Discuss the advantages and disadvantages of models used to assess risk exposure. Which of the disadvantages might be the most problematic?

What is the highest the stock price : You short sold 500 shares of Bannock Stores stock at $ 260 a share at an initial margin of 60 percent. What is the highest the stock price can go before you receive a margin call if the maintenance margin is 30 percent?

Calculating returns and standard deviations : Calculating Returns and Standard Deviations. Based on the following information, Calculate the expected return and standard deviation for the two stocks. What is the variance of this portfolio? The standard deviation?

About the implicit stock return using pe valuation : Stock Valuation and PE. Sully Corp. currently has an EPS of $2.35, and the benchmark PE for the company is 21. Earnings are expected to grow at 7 percent per year. What is your estimate of the current stock price? Assuming the company pays no dividen..

Calculate the lump sum payment assuming annual compounding : You win the lottery and can choose between 20 annual payments (beginning today) of $50,000 or $684,936 as a lump sum today. What is the discount rate the government must be using to calculate the lump sum payment assuming annual compounding?

Cofounded last year is growing rapidly : The company you cofounded last year is growing rapidly and has strong prospects for an IPO in the next year or two. The additional capital that an IPO could raise would let you hire the brightest people in the industry and continue to innovate with n..

Accounting industry that impact fraud investigation : Submit the introduction to fraud as it applies to your case study of WorldCom analysis. Consider the elements of fraud, the theories of crime causation, red flags of evidence based on the elements of the fraud triangle, regulatory and legal factors i..

What new challenges might this additional work create : The senior partner of an accounting firm is looking for ways to increase the firm’s business. What other services besides traditional accounting can the firm offer to its clients? What new challenges might this additional work create?

User Account

All Pages