Using the following information for Tiger Inc calculate earnings per share, the price-to earnings ratio, dividend payout and dividend yield for the firm. Analyze these market ratios
2015 2014
Net income $960 million $854 million
Shares of common stock outstanding 420 million 419 million
Dividends per share $ 1.75 $ 1.60
Market price per share $56 $50
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What will be an ideal response?
2015 2014
Earnings per share $2.29 $2.04
PE ratio 24.45 24.51
Dividend payout 76.42% 78.43%
Dividend yield 3.13% 3.20%
The earnings per share has increased, but the market has not reacted to the change as evidenced by the stable PE ratio. The dollar amount of dividends has increased but the dividend payout and yield have declined slightly as the dividends did not go up as fast as the earnings per share and market price of stock. Given the low interest rates in 2014 and 2015, shareholders are realizing a good return of over 3% in dividends from their investment.
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