stock and bond valuation 5
For your second SLP assignment, continue to do research on the company you chose to write about for your Module 1 SLP. This time you will be doing research about the valuation of the company to try to determine if its stock price is overvalued or undervalued. You can use Google Finance, Yahoo Finance, or similar Web pages to find the financial information about this company.
Write a 2- to 3-page paper with the following items:
- What is the P/E ratio of this company? How does the P/E ratio compare to other companies in this industry? Based on the P/E ratio, do you think the company is overvalued or undervalued?
- Find the companyâ€™s balance sheet. Calculate the book value of each share. This can be done by taking the total assets and subtracting total liabilities. Then divide the number you get by the total number of outstanding shares. Is the number you get higher or lower than the current price of the share? Based on what youâ€™ve found, would you say the stock is overvalued or undervalued?
- Finally, do a search on what different analysts have to say about your company. Do they generally recommend buying the stock or selling the stock? What reasons to they give for their assessment? Find at least three analyst reports about this company.
SLP Assignment Expectations
- Answer the assignment questions directly.
- Stay focused on the precise assignment questions. Do not go off on tangents or devote a lot of space to summarizing general background materials.
- For computational problems, make sure to show your work and explain your steps.
- For short answer/short essay questions, make sure to reference your sources of information with both a bibliography and in-text citations. See the Student Guide to Writing a High-Quality Academic Paper, including pages 11-14 on in-text citations
Workman, T. (2013). How to price/value bonds. Subjectmoney. Retrieved from: https://www.youtube.com/watch?v=7zCqoED8MVk
Workman, T. (2013). How to value stocks. Subjectmoney. Retrieved from: https://www.youtube.com/watch?v=n76Pz3HOBPo
Ross, S., Westerfield, R., & Jordan, B. (2007) Chapter 6: Interest rates and bond valuation. Essentials of Corporate Finance. McGraw Hill. Retrieved from: http://novellaqalive2.mhhe.com/sites/dl/free/007000000x/484691/Part4_Chap6.pdf
[If this link is down, click Interest Rates and Bond Valuation for an alternative link]
Fabozzi, F. J., & Peterson Drake, P. (2009). Chapter 7: Asset valuation: Basic bond and stock valuation models. Finance: Capital markets, financial management, and investment management. Wiley. Available in the Trident Online Library.
Moy, M. (2014). Bond valuation in Excel. Retrieved from: https://www.youtube.com/watch?v=H-_NP0UxX_U
Girvin, M. (2010). Stock valuation with dividend growth model. ExcellsFun. Retrieved from: https://www.youtube.com/watch?v=cbRIhwkGAnQ
Girvin, M. (2010). Stock value based on present value of future dividend cash flows. ExcellsFun. Retrieved from: https://www.youtube.com/watch?v=G2VIY5E3I3s&t=163s
Davis, A. (2016). Bond pricing. Retrieved from: https://www.youtube.com/watch?v=-DnARyndirI
Ahmad, A. (n.d.). Bonds part II: Pricing. Coursera. Retrieved from: https://www.coursera.org/learn/finance-markets/lecture/EpByC/bonds-part-ii-pricing
Ozoguz, A. (n.d.) Basics of equity valuation. Coursera. Retrieved from: https://www.coursera.org/learn/global-financial-markets-instruments/lecture/vHPRN/basics-of-equity-valuation
Vishwanath, S. (2007). Chapter 24: Debt markets. Corporate finance: Theory and practice. SAGE Publications India. Available in the Trident Online Library