If a company had 1,000,000 shares outstanding, earnings of $15,000,000 and a stock price of $18 a share, what would its P/E ratio be. How would its EPS and P/E ratio compare to competitor's EPS and P/E/ and would you consider their stock to be undervalued. Why and Why not?© BrainMass Inc. brainmass.com October 10, 2019, 12:28 am ad1c9bdddf
EPS = Earnings / no of shares outstanding = 15000000/1000000=$15 per share
P/E = P/EPS = $18/$15 = 1.20
EPS and P/E of a company are emphasized.