You are considering an investment in ABC company and compile the following information on its stock: The market price for the stock is $225/share. The LTM EPS is $15. . Over the past year, ABC paid dividends per share of $12. . The company s P/E is 15. P/BIS 1.5, and P/S is 0.8. The ROE is 20%, and the profit margin on sales is 10% The Treasury bond rate is 4% the equity risk premium is 5%, and ABC's beta is 1.5. Assume that the constant growth model is appropriate and the earnings growth rate is 3%. What stock recommendation should you provide based on comparing the current P/S ratio to the justified P/S ratio? ABC is undervalued. ABC is fairly valued ABC is overvalued