Compare the calculated sustainable growth rate you calculated in $3$ above with the P$/$E ratios over the last three years. $($Plot the P$/$E ratios over the calculated sustainable growth rates in a scatter diagram. Describe the relationships between the two measures.

Compare the three year three$-$year growth rate of earnings per share with the growth rate you calculated above. Is the actual rate of earnings growth correlated with the sustainable growth rate you calculated? Explain.

Now calculate the intrinsic value of the firm. Make reasonable judgments about the market risk premium and the risk$-$free rate, or find estimates online, clearly identifying them.

What is the required return on the firm based on the CAPM? You can locate the beta for your firm from your Nasdaq portfolio or other sources.

Now, using a two$-$stage growth model, make reasonable assumptions about how future growth rates will differ from current growth rates and calculate a new rate. Clearly identify your assumptions and rationale for choosing those rates.

Lastly, after evaluating the collective summary of the information above, decide whether you should retain this stock in your portfolio, or whether you should sell it$.$ Back up your decision by using the information calculated in your spreadsheet$-$ comparing it to the return of your overall portfolio.

AXIS Companies ROE

$($In millions$)$

Number of Shares Outstanding $8,500,00085\mathrm{.}248,500,000$

Dividends per Share $1\mathrm{.}76$

Net Income $364,000,000346\mathrm{.}04$

$5,033,000,000$

Amount of Dividends Paid $14960000$

Payout Ratio $0\mathrm{.}041098901$

Plowback ratio $0\mathrm{.}958901099$

ROE $0\mathrm{.}07232267$

Sustainable growth $0\mathrm{.}069350288$