Due to the growing demand for computer software, the Perry Company has had a very successful year and expects its earnings per share to grow by 25% to reach $5.50 for this year. Estimate the price of the company's common stock assuming the industry's price/earnings ratio is 12.
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- Energy Resources generated an EPS of $3.13 over the last 12 months. The company's earnings are expected to grow by 29.6% next year, and because there will be no significant change in the number of shares outstanding, EPS should grow at about the same rate. You feel the stock should trade at a P/E of around 35 times earnings. Use the 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.)Diana Corporation anticipates a 10 percent growth in net income and dividends. Next year, the company expects earnings per share of P5 and dividends per share of P3. Diana will be having its first public issuance of common stock. The stock will be issued at P40 per share. REQUIREMENTS: 1. What is the P/E ratio? 2. What is the required rate of return on the stock?A firm belongs to an industry whose median P/E ratio is 20.65. This P/E ratio is expected to be constant in the next several years. The firm's earnings per share this year (EPS_0) is $7.14. The earnings per share is expected to grow at a rate of 4.63 percent per year in the next five years. Calculate the expected price of this firm's stock three years from today. $168.88 $154.27 $154.27 $147.44 $211.10
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- 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 $Arrington stock is currently valued at $28.40 per share. The firm had eamings per share of $1.86 last year and projects earnings of $2.09 per share for next year. What is the trailing twelve month price-earnings ratio?Bob's Rawhide Company has a dividend payout ratio of 45%. Next year it will earn $0.75 per share and have a return on equity of 12%. The shareholders' required return is 8%. Calculate the company's growth rate of EPS. Using the earnings model, what is the value of the stock? Construct a data table that shows how the growth rate and value of the stock will change if the ROE ranges between 10% and 20%, in 1% increments. Now, using that data, create a scatter chart to show the relationship between the value of the stock and the ROE. Is the relationship linear? At what point does the model break down? Using the constant-growth model, what is the value of the stock?