Estimate of the current stock price


Problem:

Sully Corp. currently has an EPS of $3.10, and the benchmark PE for the company is 30. Earnings are expected to grow at 6 percent per year.

Required:

Question 1: What is your estimate of the current stock price?

Question 2: What is the target stock price in one year?

Question 3: Assuming the company pays no dividends, what is the implied return on the company's stock over the next year?

Note: Explain all calculation and formulas.

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Finance Basics: Estimate of the current stock price
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