Calculating Justified Leading and Trailing P/E
An analyst gathered the following information regarding Jupiter Inc.
Current market price = $60
Current year EPS = $5
Current year dividend per share = $2.25
Required rate of return on equity = 10%
Given that dividends are expected to grow at a rate of 5.5% indefinitely, calculate the following:
1.Justified trailing P/E.
2.Justified leading P/E.
3.Comment on whether the company is currently undervalued, fairly valued or overvalued.
