5.4 Example 1:  Using P/E Ratios in Valuation Tutor to Compare Stocks

 First, read in the FTS data set and selecting Download Textbook Dataset as shown:

Note:  If you already have the regular data set read in click on the Data menu in the screen below, select Download Data and click on Yes when prompted.

Now suppose you are interested in Coca-Cola and its immediate competitors.  Once the download is complete, select Coca-Cola from the dropdown of stocks to reach the following screen:

In the bottom LHS of Valuation Tutor click on Profile and select Competitors:

This web link takes you to the competitor’s page for Coca-Cola in the bottom browser part of Valuation Tutor.  You will see that there are active three stocks listed (at the time of this example):

KO (Coca-Cola), DPS (Dr Pepper Snapple Group, Inc.) and PEP (PepsiCo)

Now at the top of the screen in the button to the left of Calculate you will see Select Subset of Stocks:

Type in the tickers of the three companies, KO, DPS, and PEP and click Accept Tickers:

On the main screen, click on the button Calculate for All:

 You will see the Price to Earnings ratios for the three companies:

This computes P/E Ratios in various forms for the immediate competitors of Coca-Cola and provides detailed access to the comparisons.  For example we plot the P/E Ratios for the three competitors below:

Similarly, for PEG Ratios:

From this exercise, you can see that Valuation Tutor makes it easy to compare competitors.   Furthermore you can export your results to Excel by clicking on the Edit menu item above and selecting Export to Excel.

We can repeat the above calculate all for the remaining price ratios.  For example, the Price/Sales ratio for KO provides additional estimates such as estimated Break/Even points in Sales Revenue.