Company XYZ closed at $46.06 per share with a P/E ratio of 14.29. Answer the fol

Question

Company XYZ closed at $46.06 per share with a P/E ratio of 14.29. Answer the following questions. a. How much were earnings per share? b. Does the stock seem overpriced, underpriced, or about right given that the historical P/E ratio is 12-14? a. How much were earnings per share? sl (Round to the nearest cent as needed.) b. Based on the fact that Company XYZ stock historically trades at an average P/E ratio of 12-14, does the stock price seem overpriced, underpriced, or about right? Overpriced O About right O Underpriced

Explanation / Answer

a) EPS = 46.06/14.29 = $3.22

b) If P/E ratio is 12.14

P = 12.14*3.22 = 39.09

So, stock is overpriced

Option A is Correct

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