The Retail Box has a historical P/CF ratio of 21.5. The current CFPS is $1.42 and the projected CFPS growth rate is 5.6 percent. The current EPS is $1.02. What is the expected price of this stock one year from now?

Question

Quizplus · Accepted Answer

The expected price one year from now is calculated by first finding the projected CFPS for next year: $1.42 * (1 + 0.056) = $1.49952. Then, multiply the projected CFPS by the historical P/CF ratio: $1.49952 * 21.5 = $32.24.

The Retail Box Has a Historical P/CF Ratio of 21