Respond to classmates discussion

Anonymous
timer Asked: Oct 21st, 2018
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Question Description

Respond to classmates- This is the discussion question they had to answer.

Select four stocks of your choice that are diversified across four different sectors or industries. Research each stock using Mergent Online. Written instructions and a video found here: Mergent Online Instructions

In your initial post, label your selected stock as “choice,” the competitor stock as “peer,” the industry information as “industry,” and list the P/E ratio for each of these categories.

Comment on your findings. Based on the P/E ratio, do you believe your choice stock to be fairly priced, a ‘value,’ or overpriced as compared to a peer and the industry as a whole? Why?

_________________________________________________________________________________________

1. Alexandria- Classmates response to discussion question

I have listed my stock research below. I choose to first compare Walmart and Kroger since they are in similar industries, but I feel that Kroger (also called Dillions here in Kansas) has a much better reputation. However, that does not appear to affect their stock pricing. Walmart had both higher stock closing price and PE Ratio. A higher PE ratio can indicate investor confidence in the company or it may just indicate overpriced stock. Since Walmart has a higher closing price to match their high rate the first conclusion is more plausible. When comparing Walmart to their competitors through Mergent Online I found that their PE ratio is much higher, but so is their revenue. Kroger’s PE ratio is below the industry average. Due to this, I do not believe that either stock is overpriced. As an investor, I would choose Walmart over the peer choice.

For my next two stocks I compared UPS and FedEx. Both companies are in the airlines/air freight sector. When comparing these two I find that FedEx has lower revenues, lower income, but also lower liabilities. I feel that FexEx may be over priced and that going with UPS will be the better option. While the closing price was lower the PE ratio was higher. UPS also has a PE ratio higher than the industry average while FedEx is below.

Apple and Intel P/E ratios are both below the industry average but there are two major outliers in Hitachi, Ltd with 86.88 and Oracle Corp with 52.06. If we were to remove those two companies when calculating the industry average it would be 18.27. With that in mind, I do believe Apple would be a good company to invest in.

The other two comparisons were Toyota and Ford. Here it is easy to see Toyota would be the better option. Not only are they above the industry average for PE ratio they have a higher closing price.

Choice

Peer

Walmart:

Sector: General Merchandise/Department Stores

Closing Price: 95.56

PE Ratio: 55.17

Industry Avg: 17.48

Kroger:

Sector: Retail - Food & Beverage, Drug & Tobacco

Closing Price: 27.29

PE Ratio: 13.05

Industry Avg: 17.48

UPS:

Sector: Airlines/Air Freight

Closing Price: 118.01

PE Ratio: 19.73

Industry Avg: 15.61

FedEx:

Sector: Airlines/Air Freight

Closing Price: 223.46

PE Ratio: 12.63

Industry Avg: 15.61

Apple Inc:
Sector: Computer Hardware & Equipment

Closing Price: 216.02

PE Ratio: 19.58
Industry Avg: 48.65

Intel Corp:
Sector: Computer Hardware & Equipment

Closing Price: 44.97

PE Ratio: 16.11
Industry Avg: 48.65

Toyota Motor Crop:

Sector: Autos-Manufacturing

Closing Price: 116.67
PE Ratio: 14.87
Industry Avg: 8.67

Ford Motor Co:

Sector: Autos-Manufacturing

Closing Price: 8.51
PE Ratio: 5.03
Industry Avg: 8.67


2. Latonya- Classmates response to discussion question

Here are the Stocks I have chosen with their calculated P/E's.

I used the P/E Ratio per Sector provided by NYU Stern School of Business to find the Industry information.

When looking for competitors for Netflix I looked for Hulu. Hulu is listed under NBC which is listed under GE. I think that in comparison to GE, Netflix is overpriced. But compared to the Entertainment industry it appears to be fairly priced.

I believe my choice stock AbbVie to be fairly priced in comparison to its competitor Johnson & Johnson. They both are underpriced as far as the Healthcare Industry is concerned coming in at less than 50%.

My choice stock in Apparel, Nike appears to be fairly priced in comparison to its competitor Crocs. They are both earning well above the industry standard.

Though my choice stock Meredith Corp. seems to be overpriced in comparison to its peer stock, a little over double the amount, it is priced fairly in relation to other stocks in the Advertising industry.

Choice

Peer

Industry

Netflix

GE

Entertainment

287.48%

12.98%

312.73%

AbbVie

Johnson & Johnson

Healthcare

62.98%

42.78%

161.11%

Nike

Crocs

Apparel

16.54%

86.47%

19.94%

Meredith Corp

Wiley & Sons

Advertising

24.16%

11.30%

42.07%


Tutor Answer

profesorgary1
School: Carnegie Mellon University

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Review

Anonymous
Tutor went the extra mile to help me with this essay. Citations were a bit shaky but I appreciated how well he handled APA styles and how ok he was to change them even though I didnt specify. Got a B+ which is believable and acceptable.

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