Merc&Co Inc

 

 

Question 1:
Find three competitors of your company.
1.
2.
3.
Explain how you chose the three competitors.

 

 

Find the stock price of your company and the three competitors as of March 6, 2024.
Find the P/E ratio, ROE, PM, and Sales growth of your company and the three competitors.
Using the average of these four measures for the competitors, determine whether your
company's stock price is overvalued or undervalued.

 

 

Question 2:
We will use Fama-French 5 factor model + Carhart Momentum to figure out what the reaction to
your company's earnings announcement was in the fourth quarter of 2023.
Find the earnings announcement date of your company during the fourth quarter of 2023 (it
would be a date between October and December of 2023). This announcement lets the investors
know the company's earnings during the third quarter of 2023.
Go to Yahoo Finance and collect data for 250 trading days before the earnings announcement
date. Remember, as we did in class, we will ignore the first 30 trading days immediately before
the earnings announcement. So, you would take data on -31 to -281 days before the earnings
announcement. Calculate daily returns of your stock [(Price today - Price yesterday)/Price
yesterday].
Next go to Kenneth French's website. Under data library, you will see "Fama/French 5 Factors
(2x3) [Daily]." Download the .csv file. Then, you will see "Momentum Factor (Mom) [Daily]."
Again download the .csv file. Now merge the three datasets - your company's stock return
information, Fama-French 5 factors, and Momentum factor.Use  excel file. Be
careful to match the dates.
Calculate stock return premium = your stock return - risk-free rate RF
Now, run a regression where your stock return premium will be the dependent (y) variable and
the 6 factors will be independent (x) variables. From the regression coefficients, write down the
factor loadings below. What do they mean?