Sully Corp. currently has an EPS of $2.35, and the benchmark PE for the company is 21.

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Sully Corp. currently has an EPS of $2.35, and the benchmark PE for the company is 21. Earnings are expected to grow at 7 percent per year.

a. What is your estimate of the current stock price?

b. What is the target stock price in one year?

c. Assuming the company pays no dividends, what is the implied return on the company's stock over the next year? What does this tell you about the implicit stock return using PE valuation?

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Essentials of Corporate Finance

ISBN: 978-0078034756

8th edition

Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan

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Question Posted: Feb 23, 2017 02:09 AM

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Sully Corp. currently has an EPS of $2.35, and the benchmark PE for the company is 21.

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Essentials of Corporate Finance

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