A firm has a current EPS of $1.63 and a benchmark PE of 11.7. Earnings are expected to grow 2.6 percent annually. What is the target stock price in one year?

Question

Quizplus · Accepted Answer

To find the target stock price in one year, first calculate the expected EPS in one year by growing the current EPS by the growth rate: $1.63 * (1 + 2.6%) = $1.67 approximately. Then, multiply the expected EPS by the benchmark PE ratio to get the target stock price: $1.67 * 11.7 = $19.57 approximately.

A Firm Has a Current EPS of $1