The amount of earnings per share is $2.77.
Earnings per share
a. Earnings per share = price per share / (P/E) ratio
Earnings per share = $46.07 / 16.66
Earnings per share= $2.77
B. Overpriced or underpriced stock
At P/E ratio = 12
Earnings per share = $46.07 / 12
Earnings per share = $3.84
Earning yield = ( Earning per share / market value )× 100
Earning yield = (3.84 / $46.07 ) × 100
Earning yield = 8.34%
At P/E ratio = 13
Earnings per share = $46.07 / 13
Earnings per share = $3.54
Earning Yield= (3.54 / 46.07 ) × 100
Earning Yield= 7.68%
At P/E ratio = 14
Earnings per share = $46.07 / 14
Earnings per share = $ 3.3
Earnings yield= ( 3.3 / 46.07 )×100
Earnings yield= 7.16%
Average of earning yield given P/E ratio is 12-14
Average of earning yield= ( 8.34 + 7.68 + 7.16 ) / 3
Average of earning yield= 7.73%
Earning yield = ( Earning per share / market value ) × 100
Earning yield= ( 2.77 / 46.07 ) ×100
Earning yield = 6.01%
Hence, Based on the above the stock is underpriced.
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