Question
A common way of valuing stocks is using the P/E ratio. Suppose you want to select the average P/E ratio of Walmarts competitors as the
A common way of valuing stocks is using the P/E ratio. Suppose you want to select the average P/E ratio of Walmarts competitors as the benchmark P/E ratio. To find the P/E ratios of competitors, navigate to the company stock page on Morningstar again by clicking on the Quote tab. Nex scroll down and click on the Competitors tab; next click on the More Competitors Data dropdown. Here you will be able to find competitor P/E ratios (Morningstar provides the data for three competitors. So, make sure to use the scroll bar at the bottom to get the data from all three competitors.) Create the benchmark P/E ratio for Walmart by taking the average of the competitor P/E ratios. If you compare Walmarts P/E ratio (look under Walmart on the same table with the competitor data to find this) with the benchmark P/E you calculated above, is the stock overvalued or undervalued? Explain.
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