Question
Use the information below to answer questions 4 through 7: Dylan Corp.s Stock price is currently $100 per share; in the past 12 months its
Use the information below to answer questions 4 through 7:
Dylan Corp.s Stock price is currently $100 per share; in the past 12 months its earnings per share (EPS) was $3.50; and analysts consensus EPS estimate over the next 12 months is $4.75. Its expected dividend is $3 next year. Ryder Corp.s Stock price is currently $50 per share; in the past 12 months its earnings per share (EPS) was $1.50; and analysts consensus EPS estimate over the next 12 months is $2.00. It does not pay a dividend.
4. What is the trailing P/E for Dylan Corp. and Ryder Corp., respectively? (2 points total, 1 points each)
5. What is the forward P/E for Dylan Corp. and Ryder Corp., respectively? (2 points total, 1 points each)
6. Assume that investors tend to use the forward P/E multiple when valuing stocks. If Ryder Corps EPS is revised upward to $2.00 per share, what do you expect the stock price to be based on the forward P/E multiple approach? (3 points)
7. What is the PEG ratio and adjusted PEG ratio for Dylan Corp., respectively? (2 points total, 1 points each)
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