Phoenix Corp. faltered in the recent recession but has recovered since. EPS and dividends...
Phoenix Corp. faltered in the recent recession but has recovered since. EPS and dividends have grown rapidly since 2017.
| 2017 | 2018 | 2019 | 2020 | 2021 |
EPS | $.75 | 2.00 | 2.50 | 2.60 | 2.65 |
Dividends | $ 0 | 1.00 | 2.00 | 2.30 | 2.65 |
Dividend growth | — | — | 100% | 15% | 15% |
The figures for 2020 and 2021 are of course forecasts. Phoenix’s stock price today in 2019 is $21.75. Phoenix’s recovery will be complete in 2021, and there will be no further growth in EPS or dividends.
A security analyst forecasts next year’s rate of return on Phoenix stock as follows:
What’s wrong with the security analyst’s forecast? What is the actual expected rate of return over the next year?
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