May Inc. just reported a net income of $8000000 and its current stock price is $34.00 per share. May Inc. is forecasting an increase of 25% of its net income next year, but it also expects it will have to issue 1,500,000 new shares of stock ( raising its shares oustanding from 5,500,000 to 7,000,000).
1. If May Inc. forecast turns out to be correct and its price-to-earnings (P/E) ratio not change, what does May Inc. expect its tock price to be one year from now?
2. One year later, May northern Inc.'s stock trading at $47.95 and the company report it ocmmon eqity value as $46,620,000. May Inc. market-to-book (M/B) ratio will be What?
3. Can a company's stock have a nagative P/E ratio?