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You are trying to value LMO common stock. Comparable firms in the same industry have an average P/E=19. Comparable firms also have an average dividend
You are trying to value LMO common stock. Comparable firms in the same industry have an average P/E=19. Comparable firms also have an average dividend yield =1.6%. a. LMO's forward EPS =$3.77. What is the stock value using P/E ratio? b. LMO pays 25% of its earnings out as cash dividends. Using the dividend yield, what is the stock value? c. Assuming a 1% growth rate, and industry average dividend yield, what is the required return to LMO stock? d. Use the dividend discount model to estimate the value of one share of LMO common stock
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