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How a share value rises up based on the EPS ?

People say that some share's EPS is 40Rs/- so its value will be 450 in 3 Months time from its current value of 350Rs/-....How's it possible....Please let me know how they are able to say it?

Public Comments

1. it all about fundamentals of stock market.....they are mathematical true but calculations change the prices of the stock like falling of stock market, losing a contract etc...these can effect share prices even on stable eps.....for more details mail me star_aqs@yahoo.co.in
2. You take a certain company in a certain sector. You see that the average P/E for that sector ia, say 10. Your particular company has historic earnings per share of 5p and the share price is 50p. OK, so the P/E is 10 (about right). Now let's say the analysts reckon that next years profit and thus earnings are set to double. Earnings per share (EPS) should be 10p. With a sector P/E of ten that should give a share price of 100p. So you would expect the shrae price to rise.
3. It is one of the prime factor.