Question

The Satellite Shoppe has current sales per share of $10.55. The sales per share are expected to increase at an annual rate of 12 percent. The historical P/E ratio is 16.2 and the historical P/S ratio is 9.8. What is the expected price of this stock one year from now?

Answer 1

the expected price of the stock one years from now is $115.80

Step-by-step explanation:

The computation of the expected price of the stock one years from now is as follows;

= This year's sales per share × (1 + growth in sales) × historic P/S ratio

= $10.55 × (1 + 0.12) × 9.8

= $115.80

Hence, the expected price of the stock one years from now is $115.80

The same is to be considered by applying the above formula