FinDW5

P/E Ratio Analysis of Coca Cola.

According to morningstar, Coca Cola's P/E ratio is 67.96, and Pepsi's P/E ratio is 32.46. This is quite a significant difference showing Coca Cola's P/E ratio to be more than double Pepsi's P/E ratio. The stock is definitely overvalued because with comparing Coca Cola and Pepsi you can see how much more Coca Cola is willing to pay for each dollar of annual earnings. In my opinion if a company is doing well, and has been doing well for quite some time i.e. Coca Cola, it would be reasonable to buy the stock especially if they're willing to pay so much for each dollar of annual earnings.

https://www.morningstar.com/stocks/xnys/ko/quote.html

https://www.morningstar.com/stocks/xnas/pep/quote.html

Student B.

P/E Ratio Analysis of American Express (AXP).

American Express (AXP) has a P/E of 13.53 compared to its competitor, Citigroup (C) holding a P/E of 9.37.  Certainly, the difference of the two goes beyond the P/E ratio.  Both companies have projected drops in their respective P/E ratios, but there are other overall differences.  Citi has held steady with its P/E while AXP has had considerable fluctuation the past 3 years.  Both companies have a marginal but comparable Price/Earnings to growth ratio with similar cash flow and earning yields. 

Is the stock overvalued, undervalued, or properly valued? Why?  The stock prices are strikingly different with AXP ($107) and Citi ($63) trading at different ends of the spectrum.  The revenue figures show a difference with Citi holding a 5 yr avg of 73.7 Billion to American Express’ 28.48 Billion.  Citi had slight growth in revenue while American Express had significant decline over the same period. 

Based off my research, I am would consider buying American Express stock because of its upword trend in value and growth potential.  I would still want more information on both stocks to have better understanding of their long term growth.