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Week 4 Discussion Valuing A Stock

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Walden University
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Week 4: Discussion: Valuing a Stock
Student’s Name
Department, Institutional Affiliation
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Week 4: Discussion: Valuing a Stock
Zutter and Gitman (2012) postulate that a company can acquire equity capital by selling
the preferred or common stock. Common stock refers to security, which depicts ownership of an
enterprise. Notably, the board of directors are common stockholders and hence vote for an
organization's policy. The selected common stock for this study is Proctor and Gamble, the
common stock PG (Nasdaq, 2021). As of May 7, 2021, Proctor and Gamble closed at $135.15, a
0.01% increase.
The value of a stock is predicated on the enterprise’s capability to create and grow its
profits. A stock market investor should decide the stocks to and sell. Besides, such an investor
must also determine when to buy the stock or sell them. Therefore, the activity requires analysts
to determine the economic value of the stocks. In this case, the price ratio model evaluates the
value of Proctor and Gamble's common stock using the earnings per share (EPS) and price
earning ratio (PER). Proctor and Gamble’s EPS is $4.96 (United States Securities and Exchange
Commission, 2020) and 24.85 as the PER (Yahoo Finance, 2020). Therefore, the common stock
valuation is 24.85*4.96, which is $123.26. Thus, an investor would make $11.89 return on
investment at the end of the period. Therefore, given that the company’s common stock is
trading at a higher price than the valuated price, it is recommended for an investor to buy Proctor
and Gamble common stock.

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1 Week 4: Discussion: Valuing a Stock Student’s Name Department, Institutional Affiliation Course Instructor’s Name Date 2 Week 4: Discussion: Valuing a Stock Zutter and Gitman (2012) postulate that a company can acquire equity capital by selling the preferred or common stock. Common stock refers to security, which depicts ownership of an enterprise. Notably, the board of directors are common stockholders and hence vote for an organization's policy. The selected common stock for this study is Proctor and Gamble, the common stock PG (Nasdaq, 2021). As of May 7, 2021, Proctor and Gamble closed at $135.15, a 0.01% increase. The value of a stock is predicated on the enterprise’s capability to create and grow its profits. A stock market investor should decide the stocks to and sell. Besides, such an investor must also determine when to buy the stock or sell them. Therefore, the acti ...
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