Analyze and compare Alphabet, PepsiCo, and Caterpillar The following table shows the stock price, earnings per share, and dividends per share for Alphabet Inc. (GOOG), PepsiCo, Inc. (PEP), and Caterpillar Inc. (CAT) for a recent year: Alphabet Pepsico Caterpillar Market price of common stock at year-end Earnings per share Dividends per share $778.01 $99.92 $67.96 22.84 3.71 4.23 0.00 2.76 3.01 1. For each company, determine the: a. Price-earnings ratio: Divide common market price per share by common earnings per share. Round to two decimals. Alphabet: PepsiCo: Caterpillar: b. Dividend yield: Divide common dividends per share by common market price per share. Round to one decimal place. If your answer is zero, enter "0". Alphabet: % PepsiCo: Caterpillar: 2. Based on the information available, which company would you expect to have the best potential for future common stock price appreciation? * has the largest dividend yield and strong earnings per share but has the lowest price-earnings ratio. Stock market participants seem to be skeptical about * pays no dividend and, thus, has no dividend yield. However, 's future prospects and are discounting its stock price despite its relatively solid performance. has the largest price-earnings ratio. Stock market participants are expecting a strong return on their investment from appreciation in 's stock price. has the second highest price-earnings ratio but a lower dividend yield and earnings per share than . This suggests that the market expects -'s combination of earnings and dividends to improve in the coming years.
Analyze and compare Alphabet, PepsiCo, and Caterpillar The following table shows the stock price, earnings per share, and dividends per share for Alphabet Inc. (GOOG), PepsiCo, Inc. (PEP), and Caterpillar Inc. (CAT) for a recent year: Alphabet Pepsico Caterpillar Market price of common stock at year-end Earnings per share Dividends per share $778.01 $99.92 $67.96 22.84 3.71 4.23 0.00 2.76 3.01 1. For each company, determine the: a. Price-earnings ratio: Divide common market price per share by common earnings per share. Round to two decimals. Alphabet: PepsiCo: Caterpillar: b. Dividend yield: Divide common dividends per share by common market price per share. Round to one decimal place. If your answer is zero, enter "0". Alphabet: % PepsiCo: Caterpillar: 2. Based on the information available, which company would you expect to have the best potential for future common stock price appreciation? * has the largest dividend yield and strong earnings per share but has the lowest price-earnings ratio. Stock market participants seem to be skeptical about * pays no dividend and, thus, has no dividend yield. However, 's future prospects and are discounting its stock price despite its relatively solid performance. has the largest price-earnings ratio. Stock market participants are expecting a strong return on their investment from appreciation in 's stock price. has the second highest price-earnings ratio but a lower dividend yield and earnings per share than . This suggests that the market expects -'s combination of earnings and dividends to improve in the coming years.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter16: Financial Statement Analysis
Section: Chapter Questions
Problem 2MAD
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Transcribed Image Text:Analyze and compare Alphabet, PepsiCo, and Caterpillar
The following table shows the stock price, earnings per share, and dividends per share for Alphabet Inc. (GOOG), PepsiCo, Inc. (PEP), and Caterpillar Inc. (CAT) for a recent year:
Alphabet Pepsico Caterpillar
Market price of common stock at year-end
Earnings per share
Dividends per share
$778.01
$99.92
$67.96
22.84
3.71
4.23
0.00
2.76
3.01
1. For each company, determine the:
a. Price-earnings ratio: Divide common market price per share by common earnings per share. Round to two decimals.
Alphabet:
PepsiCo:
Caterpillar:
b. Dividend yield: Divide common dividends per share by common market price per share. Round to one decimal place. If your answer is zero, enter "0".
Alphabet:
%
PepsiCo:
Caterpillar:
2. Based on the information available, which company would you expect to have the best potential for future common stock price appreciation?
* has the largest dividend yield and strong earnings per share but has the lowest price-earnings ratio. Stock market participants seem to be skeptical about
* pays no dividend and, thus, has no dividend yield. However,
's
future prospects and are discounting its stock price despite its relatively solid performance.
has the
largest price-earnings ratio. Stock market participants are expecting a strong return on their investment from appreciation in
's stock price.
has the second
highest price-earnings ratio but a lower dividend yield and earnings per share than
. This suggests that the market expects
-'s combination of earnings and
dividends to improve in the coming years.
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