Sankey Company has earnings per share of $3.85. The benchmark PE is 18.6 times. What stock price would you consider appropriate?

Multiple Choice

$22.45

$48.31

$71.61

$59.96

$46.38

To determine the appropriate stock price, we can use the Price-to-Earnings (PE) ratio formula:

\[
\text{Stock Price} = \text{Earnings per Share} \times \text{Benchmark PE Ratio}
\]

Given:
- Earnings per Share (EPS) = $3.85
- Benchmark PE Ratio = 18.6

Calculating the stock price:

\[
\text{Stock Price} = 3.85 \times 18.6 = 71.61
\]

**Answer:** The appropriate stock price is **$71.61**.

Would you like to explore further or need additional details?

Here are five related questions:
1. How would a change in the benchmark PE ratio affect the stock price?
2. What factors influence a company's PE ratio?
3. How does the PE ratio of a company compare with industry benchmarks?
4. How can investors interpret a high or low PE ratio?
5. What other financial ratios are useful in evaluating stock prices?

**Tip:** The PE ratio is a quick way to gauge if a stock is potentially over- or under-valued compared to peers.

Sankey Company has earnings per share of $3.85. The benchmark PE is 18.6 times. What stock price would you consider appropriate?

Multiple Choice:

$22.45

$48.31

$71.61

$59.96

$46.38

Learn how to calculate the stock price for Sankey Company using its earnings per share (EPS) and the benchmark PE ratio. With an EPS of $3.85 and a PE ratio of 18.6, we determine the appropriate stock price among the given options. Ideal for Grades 10-12.

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