Consensus eps forecast for the calendar year

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In early 2016, stocks of company Doitall, a buzzing start-up was trading at INR 750 with a P/B ratio of 3.42. Based on analysts’ consensus EPS forecast for the calendar year 2016, the forward P/E ratio was 20.6. The same analysts were giving the stock a PEG ratio of 1.48, based on forecasts for 2017. The company is not planning to pay dividends for the next 5 years. Assuming a hurdle rate of 10%, if Sam, an equity research analyst expects the company’s earnings in 2018 to be INR 50, should he give a buy or sell recommendation? Show calculations of your estimate of the company’s stock price in 2018.

Reference no: EM131607795

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