Justified Forward Price to Earnings Ratio Calculator

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✖Dividend is a distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.ⓘ Dividend [D]			+10% -10%
✖Earnings Per Share (EPS) is the portion of a company's profit allocated to each outstanding share of common stock.ⓘ Earnings Per Share [EPS]			+10% -10%
✖The cost of equity is the return a firm theoretically pays to its equity investors, i.e., shareholders, to compensate for the risk they undertake by investing their capital.ⓘ Cost of Equity [Re]			+10% -10%
✖Growth Rates refer to the percentage change of a specific variable within a specific time period, given a certain context.ⓘ Growth Rate [g]			+10% -10%

✖Justified Forward Price to Earnings Ratio is a concept used in finance to estimate the appropriate Price to earnings ratio for a stock based on it's expected future earning's growth rate.ⓘ Justified Forward Price to Earnings Ratio [JF_PE]

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Justified Forward Price to Earnings Ratio Solution

STEP 0: Pre-Calculation Summary

Formula Used

Justified Forward Price to Earnings Ratio = (Dividend/Earnings Per Share)/(Cost of Equity-Growth Rate)
JF_PE = (D/EPS)/(Re-g)
This formula uses 5 Variables

Variables Used

Justified Forward Price to Earnings Ratio - Justified Forward Price to Earnings Ratio is a concept used in finance to estimate the appropriate Price to earnings ratio for a stock based on it's expected future earning's growth rate.
Dividend - Dividend is a distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
Earnings Per Share - Earnings Per Share (EPS) is the portion of a company's profit allocated to each outstanding share of common stock.
Cost of Equity - The cost of equity is the return a firm theoretically pays to its equity investors, i.e., shareholders, to compensate for the risk they undertake by investing their capital.
Growth Rate - Growth Rates refer to the percentage change of a specific variable within a specific time period, given a certain context.

STEP 1: Convert Input(s) to Base Unit

Dividend: 25 --> No Conversion Required
Earnings Per Share: 700 --> No Conversion Required
Cost of Equity: 200000 --> No Conversion Required
Growth Rate: 0.2 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

JF_PE = (D/EPS)/(Re-g) --> (25/700)/(200000-0.2)

Evaluating ... ...

JF_PE = 1.78571607143036E-07

STEP 3: Convert Result to Output's Unit

1.78571607143036E-07 --> No Conversion Required

FINAL ANSWER

1.78571607143036E-07 ≈ 1.8E-7 <-- Justified Forward Price to Earnings Ratio

(Calculation completed in 00.004 seconds)

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Justified Forward Price to Earnings Ratio Formula

LaTeX Go

Justified Forward Price to Earnings Ratio = (Dividend/Earnings Per Share)/(Cost of Equity-Growth Rate)
JF_PE = (D/EPS)/(Re-g)

What do you mean by Justified Forward Price to Earnings Ratio ?

Justified Forward Price to Earnings Ratio refers to a variation of the price-to-earnings ratio linked to the Gordon Growth Model (GGM) in an effort to better understand a company’s underlying performance. It's called "justified" because it attempts to rationalize the current price of a stock relative to its anticipated future earnings. The Justified Forward P/E Ratio helps investors gauge whether the current stock price appropriately reflects the company's future earnings potential. If the calculated ratio is higher than the company's historical average or the industry norm, it may indicate that the stock is overvalued unless the company's future growth prospects justify the higher ratio. Conversely, a lower ratio might suggest undervaluation. Investors typically use this ratio in conjunction with other valuation metrics and qualitative analysis to make well-rounded investment decisions.

How to Calculate Justified Forward Price to Earnings Ratio?

Justified Forward Price to Earnings Ratio calculator uses Justified Forward Price to Earnings Ratio = (Dividend/Earnings Per Share)/(Cost of Equity-Growth Rate) to calculate the Justified Forward Price to Earnings Ratio, Justified Forward Price to Earnings Ratio is a valuation metric used by investors to estimate a stock's appropriate price to earnings ratio based on its expected future valuation. Justified Forward Price to Earnings Ratio is denoted by JF_PE symbol.

How to calculate Justified Forward Price to Earnings Ratio using this online calculator? To use this online calculator for Justified Forward Price to Earnings Ratio, enter Dividend (D), Earnings Per Share (EPS), Cost of Equity (Re) & Growth Rate (g) and hit the calculate button. Here is how the Justified Forward Price to Earnings Ratio calculation can be explained with given input values -> 1.8E-7 = (25/700)/(200000-0.2).

FAQ

What is Justified Forward Price to Earnings Ratio?

Justified Forward Price to Earnings Ratio is a valuation metric used by investors to estimate a stock's appropriate price to earnings ratio based on its expected future valuation and is represented as JF_PE = (D/EPS)/(Re-g) or Justified Forward Price to Earnings Ratio = (Dividend/Earnings Per Share)/(Cost of Equity-Growth Rate). Dividend is a distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders, Earnings Per Share (EPS) is the portion of a company's profit allocated to each outstanding share of common stock, The cost of equity is the return a firm theoretically pays to its equity investors, i.e., shareholders, to compensate for the risk they undertake by investing their capital & Growth Rates refer to the percentage change of a specific variable within a specific time period, given a certain context.

How to calculate Justified Forward Price to Earnings Ratio?

Justified Forward Price to Earnings Ratio is a valuation metric used by investors to estimate a stock's appropriate price to earnings ratio based on its expected future valuation is calculated using Justified Forward Price to Earnings Ratio = (Dividend/Earnings Per Share)/(Cost of Equity-Growth Rate). To calculate Justified Forward Price to Earnings Ratio, you need Dividend (D), Earnings Per Share (EPS), Cost of Equity (Re) & Growth Rate (g). With our tool, you need to enter the respective value for Dividend, Earnings Per Share, Cost of Equity & Growth Rate and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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