Same company as in RA 5.3: Stock price of $42, earnings of $2.12 per share during the last twelve months, forecasted earnings of $2.84 over the following year, and average earnings growth forecast of 12.5% per year for the next five years. What is this stock's Forward P/E ratio, rounded to one decimal place

Question

Business

Zander Pierce

7 May, 13:06

Same company as in RA 5.3: Stock price of $42, earnings of $2.12 per share during the last twelve months, forecasted earnings of $2.84 over the following year, and average earnings growth forecast of 12.5% per year for the next five years. What is this stock's Forward P/E ratio, rounded to one decimal place

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Answers (1)

Know the Answer?

Jayden Singh · Answer 1

P/E ratio = $14.78

Explanation:

Market value per share = $42

earning per share = $ 2.84

As we know that:

Price earning ratio = market value per share / earning per share

= $42 / 2.84

= $14.78

Price earning ratio is an indicator to investor whether to invest in this company long term or not.