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The Price is Right! Utilizing 1 of these public companies—Target, Coke, Pepsi, Wal-Mart, or J. P....

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Finance

The Price is Right! Utilizing 1 of these publiccompanies—Target, Coke, Pepsi, Wal-Mart, or J. P. Morgan—determinethe right price for that company’s stock in the following 5 easysteps: Visit this Web site. Type in your selected company’s name inthe Quote Search box, and select your company's stock symbol. Jotdown the current stock price. Select the Analysis tab, and find theAnalyst Recommendation box. Jot down the stock’s Earnings Per Share(EPS) Estimate. Select the Price Ratios tab, and jot down thecurrent Price to Earnings Ratio (P/E) for the industry (not thecompany). Using the PE valuation model to determine the right pricefor this stock, multiply the industry average P/E ratio by thestock’s EPS to estimate the intrinsic price of the stock. Answerthe following questions: Is this stock overvalued or undervaluedwhen compared to the current stock price? What are the analysts’recommendations for this stock (buy, sell, or hold)? Do you agreewith them? Would you consider purchasing this stock? Why?

Answer & Explanation Solved by verified expert
4.3 Ratings (590 Votes)

Particulars In USD
Pepsico (PEP) 136.73
EPS (20190 5.52
Current PE Ratio            24.77
Industry PE Ratio (Soft Beverages 20.16
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/pedata.html
Current share price should be : Industry PE Ratio * Trailing EPS of the company
Should be Price = 111.2832
By Using the industry PE, Company is looking overvalued
Comments : Company can be looking overvalued due to people have more faith in its future ability
Recommendation by Analysts : Hold this stock, because it will grow further in future and provide abnormal returns
https://markets.businessinsider.com/analyst/pep/hold
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