The price of a stock is often expressed relative to a base such as earnings. The resulting
Question:
The price of a stock is often expressed relative to a base such as earnings. The resulting ratio is then used to value the stock. Go to a website that provides information such as the price-to-earnings ratio, price-to-sales ratio, price-to-book ratio, the PEG ratio, dividends, estimated growth rate, profit margin, and return on equity. Compare several firms within the same industry, such as telecommunications (e.g., AT&T and Verizon Communications), food products (e.g., Del Monte, Heinz, and Kellogg), or retailers
(Best Buy, Limited Brands, Target, and Wal-Mart). Compare the firms’ valuation and performance ratios. Which stock appears to be the best buy in each group? (Remember that a particular website may not provide all of the needed information, so you may have to consult more than one.)
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