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The price of C. F. Eye Care Corporation (CFEC) is currently $23 per share. Their earnings...

The price of C. F. Eye Care Corporation (CFEC) is currently $23 per share. Their earnings per share (EPS) is $1.25. Their 5-year average P/E is 22. If CFEC’s earnings per share are expected to grow at 6% next year, what would you expect their price to be?

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Answer #1

We see that the price next year=Earnings next year*5 year average PE=1.25*1.06*22=29.15

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