- Reading: (a) “Equity Valuations, the Comparables Approach,” by Ryan Fuhrmann, on Investopedia website; (b) “Valuation Using Multiples” on Wikipedia website.
- Online Research: using Yahoo Finance, look up 4 companies in different industries (see Template 1 posted in Files for assigned companies) and create a table comparing their trailing PE ratio, their average Earnings growth rate over the past 5 years, their forecasted EPS growth rate for the next 5 years, and their forecasted growth rate in stock price between now and the 1 year analyst estimate. Answer thought questions on Template.
- Online Research: using Yahoo Finance, look up 4 companies in the same industry (see Template 2 posted in “Files” for assigned companies) and create a table comparing their ratios for Price/Earnings, Price/EBIT, Price/Revenues, and Price/Book Value. (REMEMBER you must use either per-share OR total company values in both numerator and denominator to calculate ratios: you can’t compare a per-share price with total-company earnings, for example, or you will get a bizarre number.) Answer the thought questions on the Template and follow the instructions to calculate the value of a “new” company in this industry.
Deliverable: 2 Completed Templates