If you look at stock prices over any year, you will find a high and low stock price for the year. Instead of a single benchmark PE ratio, we now have a high and low PE ratio for each year. We can use these ratios to calculate a high and a low stock price for the next year. Suppose we have the following information on a particular company over the past four years:
|
Year 1 |
Year 2 |
Year 3 |
Year 4 |
| High price |
$99.40 |
$123.00 |
$132.40 |
$149.03 |
| Low price |
74.23 |
90.34 |
71.02 |
117.55 |
| EPS |
8.68 |
10.43 |
11.51 |
12.90 |
Earnings are projected to grow at 6 percent over the next year.
What is your high target stock price over the next year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
High target stock price $___________
What is your low target stock price over the next year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Low target stock price $__________