Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please answer the question on the word document about Home Depot. I need it to finish my finance paper. Thanks Stock Performance -6- Collect and

please answer the question on the word document about Home Depot. I need it to finish my finance paper. Thanks

image text in transcribed Stock Performance -6- Collect and evaluate the data about stock performance of the assigned company's for the last one year. Compare the results that you received against the industry or main competitor. Write about 1-2 pages of analysis of the ratio results you received. (20% of the project grade). HD, LOW, and SPX P/B Ratios What does P/B tell us? HD, LOW, and SPX P/S Ratios What does P/S tell us? HD, LOW, and SPX P/E Ratios What does P/E tell us? Stock Performance -6- Collect and evaluate the data about stock performance of the assigned company's for the last one year. Compare the results that you received against the industry or main competitor. Write about 1-2 pages of analysis of the ratio results you received. (20% of the project grade). HD, LOW, and SPX P/B Ratios HD, LOW, and SPX P/B Ratios Figure 11: P/B Ratio: HD, LOW, SPX 25 20 15 P/B Ratio 10 5 0 2012 2013 2014 TTM Year HD LOW SPX As seen in Figure 11, HD's P/B ratio has averaged 12.4 since 2012. A low of 5.2 in 2012 has risen to a high of 22.4 which is the current TTM. LOW's P/B ratio has averaged 5.4 since 2012. It also had its low in 2012 with a ratio of 2.8. The peak since 2012 was reached with the TTM's ratio of 8.4. The SPX has averaged 2.5 since 2012. As can be seen, HD and LOW have significantly higher P/B ratios than SPX. What does P/B tell us? What does P/B tell us? The HD's higher P/B ratio signifies the company is more overvalued than LOW. Also HD is seen as an average rise P/B ratio since 2012. The High P/B ratio is a sign that a business has healthier future projections then past performance. Price per share can be high relative to book value because investors have to bid up the share price based on possibility for better future earnings. With that said, LOW's P/B ratio has risen, but not as significantly as HD. This tells you that LOW's performance is not as impressive as HD, albeit, significantly better than the SPX average. The lower LOW P/B ratio signifies less investor confidence. HD, LOW, and SPX P/S Ratios HD, LOW, and SPX P/S Ratios Figure 12 shows HD's P/S ratio has averaged 1.65 since 2012. A low of 1.3 in 2012 has risen to a high of 1.65 which is the current TTM. LOW's P/S ratio has averaged 1.08 since 2012. It also had its low in 2012 with a ratio of 0.8. The peak since 2012 was reached in 2014 with a Figure 12: P/S Ratio: HD, LOW, SPX 2.5 2 1.5 P/S Ratio 1 0.5 0 2012 2013 2014 TTM Year HD LOW SPX ratio of 1.3. LOW's current TTM is 1.2. The SPX has averaged 1.65 since 2012. As can be seen, HD's current P/S Ratio is slightly higher than the SPX. On the other hand, LOW's is lower than HD and the SPX. What does P/S tell us? What does P/S tell us? HD's higher P/S ratio means that investors will pay more for every dollar of sales that HD generates. As of the most current P/S ratio, investors will pay $1.60 for every dollar that HD generates in sales. LOW's current P/S ratio of 1.2 means investors will pay $1.20 for every dollar that LOW generates in sales. This indicates that LOW would be the best value in regards to the P/S ratio. Furthermore, LOW's ratio has slightly fallen from 2014 to TTM, therefore further spreading the gap between HD and LOW. HD, LOW, and SPX P/E Ratios HD, LOW, and SPX P/E Ratios P/E Ratio: HD, LOW, SPX 30 25 20 P/E Ratio 15 10 5 0 2012 2013 2014 TTM Year HD LOW SPX HD has averaged 23.35 since 2012. A low of 21.9 in 2012 has risen to a high of 25.2 which is the current TTM. LOW's P/E ratio has averaged 24.03 since 2012. Its low occurred in 2012 with a ratio of 21.1. The peak occurred in 2014 with a ratio of 27.2. LOW's current TTM is 24.2. The SPX has averaged 17.875 since 2012. As can be seen, HD and LOW have higher P/E ratios than SPX. What does P/E tell us? What does P/E tell us? HD's P/E ratio has been on the rise. This signifies investors are willing to pay more per share to receive higher potential future earnings. The higher the P/E ratio the more the market is willing to pay for each dollar of a company's earnings. A high P/E ratio is also considered a riskier investment than companies with a lower P/E ratio because a high ratio signifies high expectations which implies more risk. On the other hand, LOW's P/E ratio has shown a decline with the TTM. Investors are not willing to pay as much for a share of LOW

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Finance

Authors: Besley, Scott Besley, Eugene F Brigham, Brigham

4th Edition

0324655886, 9780324655889

More Books

Students also viewed these Finance questions

Question

1. What does this mean for me?

Answered: 1 week ago