Select a publicly traded firm and a major competitor. Firms from any industry may be used.
Recommended data source: Reuters- https://www.reuters.com/
You can use other sources if you wish.
For the firm you have selected, obtain the trailing twelve-month P/E ratio for the firm, industry, and sector.
Use information about your company’s earnings and industry and sector’s P/E s based on the P/E ratio value of your selected firm as indicated in the example. If there is no earnings estimate, or the earnings estimate is negative, use earnings for a previous year. If that’s also negative, pick another company for this assignment.
The example is only complete for one of the two firms indicated.
Your submission must include the data for both firms.
In the example provided(Attatched), Boeing’s data is included. Therefore, Boeing may not be used for this assignment by any student.
Lockheed-Martin is indicated as a competitor but no information is provided. Lockheed-Martin could still be used.
Once you have completed the steps in the Data section, write a short report discussing the valuation of your selected firm and competitor.
Note if the current price is very close to “Estimated share price based on TTM P/E and Earnings past 12 months.” This should be very close. If not, you have likely done something wrong.
How does the valuation of your firm compare to that of the competitors based on the P/E ratio?
Why might this be the case?
How does your firm’s current price compare to the estimated price? Using the industry and sector P/Es, compare both for the TTM and estimated year-end:
Is it higher or lower?
Why might that be?
Provide one rational reason why.
Based on simple analysis, which of the two firms (your selected firm and its competitor) appears to be undervalued?
Why did you draw that conclusion?
What do you suspect is the reason?
Include a citation indicating where you retrieved the data and the date retrieved. A table following the example must be included in your submission but is not considered as part of the page to page and a half write-up. Get to the point in your write-up. There is no need for extra “baggage.”
