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A stock is selling for $100.00 a share. The company earned $5.00 a share and its current dividend is $2.50 a share. What id the stock P/E ratio. Please show me how to calculate this problem.
PRICE / EARNINGS 100/5 = 20 20 P/E NO TRICKS
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Thanks but what do i do with the 2.50 dividends
Nothing do not need it some teacher giving you more info then you need to ans. Question
One of the teacher said its 2.5 percent i asked her how she got it she said find out for myself. I am going crazy trying to find out.
P/e means price to earning ratio price / years earning as a example jnj share price 56.35 earning 4.57 56.35/4.57 p/e 12.33
THE 2.5% IS THE YIELD NOT P/E $2.50 /100 = 2.5%
the p/e would be 20 for this stock. The calculation is p ($100 a share)/e ($5 earning a share) This is a good thing to gage the value of a stock but forward p/e might be better. To get this number replace the earnings with next years estimated earnings. A 20 p/e could be considered fairly costly, but if the forward p/e is 10 the stock might be worth looking at.
So the correct answer is 100/5 = 20, now you see why i have to come to this site our teachers is either quacks or to busy to explain anything. Thank you a lot.
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