Price-earnings ratio; dividend yield
The table that follows shows the stock price, earnings per share, and dividends per share for three companies for a recent year:
Eamings Dividends
Price per Share per Share
Deere & Company (DE)
$174.14
$10.28
$3.04
Alphabet (GOOG)
1,339.39
49.59
0.00
The Coca-Cola Company (KO)
55.35
2.09
1.60
a. Determine the price-earnings ratio and dividend yield for the three companies. Round to one decimal place. If an amount should be zero, enter in "0".
Deere & Company
Alphabet
The Coca-Cola Company
Price-Earnings Ratio Dividend Yield
b. Explain the differences in these ratios across the three companies by completing the following:
Deere & Company has the lowest price-earnings ratio, and is expected to produce shareholder returns through a combination of some share price appreciation and a moderate dividend. Coca-Cola has a high dividend yield and
second-highest price-earnings ratio. Alphabet pays no
dividend and, thus, has no
dividend yield. Alphabet has a high
price-earnings ratio.