85. An equity fund manager gathers the following data in order to assess the
investment potential of a company and its stock:
Company Industry
Average
Weighted average cost of capital (WACC) 14% 12%
Return on Assets (ROA) 20% 15%
Dividend Yield 0 % 1.2%
Consensus estimate of stock’s value $53 N/A
Current price of company’s stock $50 N/A
Based on the above information, which of the following statements most accurately
describes the company and its stock? The company is a:
A. growth company and its stock is a growth stock.
B. growth company and its stock is a speculative stock.
C. speculative company and its stock is a growth stock.
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