Historically, Jones Trucking has had a P/E ratio of 14.6. The firm has current net income of $92,000 with 85,000 shares of stock outstanding. The EPS growth rate is 4.5 percent. What is the expected price of this stock one year from now?

Question

Quizplus · Accepted Answer

The expected price of the stock one year from now is $16.51. This is calculated by multiplying the current stock price by the expected EPS growth rate and then adding the current EPS. The current stock price is $15.32, the expected EPS growth rate is 4.5%, and the current EPS is $1.08. So, the expected price of the stock one year from now is $15.32 * (1 + 0.045) + $1.08 = $16.51.

Historically, Jones Trucking Has Had a P/E Ratio of 14