Company X Has a P/E Ratio of 16 in Year

Multiple Choice

Company X has a P/E ratio of 16 in year 2010 and 16.5 in 2011. In 2012, its P/E ratio is 24. The best way to interpret these data is to conclude that:

A) the stock is overpriced and should be sold.
B) the stock has great growth capacity and should be bought.
C) other financial results and news should be examined to determine the cause of the P/E ratio change.
D) the stock is underpriced and should be bought.