For this activity, you will need to select a publicly traded firm and a major competitor. Firms from any industry may be used.

Data

• Recommended data source: Reuters
  • 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 companys earnings and industry and sectors 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 thats also negative, pick another company for this assignment.

The Example Table below provides an example of a partially-completed table:

	Firm	Stock Symbol	Current Share Price	Firm P/E Ratio (TTM)	Firm P/E High Last 5 yrs.	Firm P/E Low Last 5 yrs.	Industry P/E Ratio (TTM)	Sector P/E Ratio (TTM)
Selected Firm	Boeing	BA	124.8	17.79	28.93	13.76	25.9	31.64
Major Competitor	Lockheed-Martin
	Firm	Stock Symbol	Earnings past 12 months (TTM)*	Mean Year End Earnings Estimate	Estimated share price based on TTM P/E and Earnings past 12 months		Estimated share price based on Industry's TTM P/E and Firm's earnings TTM	Estimated share price based on Sector's TTM P/E and Firm's earnings TTM
Selected Firm	Boeing	BA	7.00	8.37	124.53		181.30	221.48
Major Competitor	Lockheed-Martin
	Firm	Stock Symbol	Earnings past 12 months*	Mean Year End Earnings Estimate	Estimated share price based on TTM P/E and Earnings past 12 months	Estimated share price based on Firm's TTM P/E and Mean Year End Earnings Estimates	Estimated share price based on Industry's TTM P/E and Mean Year End Earnings Estimates	Estimated share price based on Sector's TTM P/E and Mean Year End Earnings Estimates
Selected Firm	Boeing	BA	7.00	8.37	124.53	148.90	216.78	264.83
Major Competitor	Lockheed-Martin

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, Boeings 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.

Assignment Details

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 firms 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?

Deliverable

Your submission should be:

• 1 to 1 1/2 pages in length
• Single-spaced
• Times New Roman
• 12 point font.

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.