Question

A firm has a current EPS of $2.54 and a benchmark PE of 16.4. Earnings are expected to grow 3.8 percent annually. What is the target stock price in one year

Answer 1

Answer:

$43.24

Explanation:

Calculation for the target stock price in one year

Using this formula

P1=Current EPS×(1+Earnings expected growth)× PE

Let plug in the formula

P1 = $2.54 × (1 + .038) × 16.4

P1 = $2.54 × 1.038× 16.4

P1= $43.24

Therefore the target stock price in one year will be $43.24