Understanding the financial information provided the company

Stock valuation is very important for investors. By understanding the financial information provided by the company, investors can evaluate the stock value and make a decision on whether to invest or not. There are factors that are taken into consideration by investors. These factors should be analyzed before advising someone to get into the business. Some of these factors include: The 52-week range, the stock volume, price to earnings ratio, enterprise value, current stock price, Beta (volatility), dividends and yields, types of rating recommended by analyst, target price prediction for the stock, analyst revenue estimation for the next year, significance news items and press of the company over the last year among others. I recommend investing in Starbucks.

Starbucks Analysis

Question 5: What is the Dividend and Yield? Starbucks has a dividend of 1.20 which is equivalent to 1.98 %.

`Question 6: What is the Enterprise Value? the company has an enterprise value of 83.8B US dollars.

Question 11: What is the Book Value per Share? Book value per share was 3.81 US dollar.

Question 12: What type of rating are analysts recommending (i.e. buy, hold, etc.)? The type of rating recommended by analyst is to buy.

Starbucks has a stock price of 57.99 and price to earnings ratio of 19.23. “Price to Earnings Ratio measures how much investors are willing to pay per dollar of current earnings; higher PEs are often taken to mean that the firm has significant prospects for future growth. If a firm had no or almost no earnings, its PE would probably be quite large” (Ross et al., 2016). The price to earnings ratio is obtained by dividing the stock price by earnings per share (EPS). If the cost of a stock is high, then the price to earnings ratio also increases.

The price to earnings ratio tells us how much the investor has to pay for the stock. Since Starbucks has a price to earnings ratio of 19.23, this ratio is not that big, so what it means for investors is that they are not paying more to earn one dollar and what investors will get attract to is when the price to earnings ratio is high. By having a small price to earnings ratio means that more people can buy shares at a lower price and sell them when the price rises. Analysists are recommending to buy since the price of the stock will rise and the revenue will be higher.

References

Ross, S., Westerfield, R., & Jaffe, J. & Jordan, B. (2016). Corporate Finance (11th ed.). New York, NY: McGraw - Hill Education.