Problem:
Assume that the current price is $50.23. Also, assume Badger Meter's trailing 12 months earnings is exactly $1.82, which implies that its priced divided by trailing 12 month earnings 27.6.
Required:
Question: If earnings are $2.22 over the 12 months ended in one year as projected by consensus, and P/E falls to 24.0 by the end of the 12 months, what is the price return on the stock over the next 12 months?
a) -22.0%,
b) -11.8%
c) 6.1%,
d) 9.0%,
e) 35.0%
f) 37.9%
Note: Be sure to show how you arrived at your answer.