Question

Stock price of $42, earnings of $2.12 per share during the last twelve months, forecasted earnings of $2.84 over the following year, and average earnings growth forecast of 12.5% per year for the next five years. What is this stock's PEG, rounded to one decimal place?

Example 5.9: Nike's (NKE) current share price (as of close on 10/24/2019) is $91.50 and earnings per share during the trailing twelve months (EPST: Sum of the last 4 quarters' EPS) was $2.68. Yahoo! Finance reports (under Analysis tab) anEPS estimatefor next full fiscal year (2021) of $3.45 based on the average of 30 analysts' estimates (range was $3.25 to $3.67). What are Nike's current trailing and forward P/E ratios? TTM

Answer 1

1)

Stock price = $ 42

Earnings per share , EPS = $ 2.12

P/E = 42/2.12 = 19.81

Growth rate = 12.5%

PEG ratio = PE/Growth rate = 19.81/12.5% = 158.49

2) For NIKE

Trailing PE ratio = Price per share/ Trailing EPS = 91.50/2.68 = 34.14

Forward PE ratio = Price per share/Forward EPS =   91.50 / 3.45 = 26.52