Presenter(s)

Christopher R. Cole, Samuel W. Orman

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Description

Several academic studies indicate that measures relative valuation (e.g. price to book, price to earnings, etc.) are useful predictors of stock returns. The working hypothesis is that stocks with lower price to book and price to earnings ratios are considered undervalued and have greater prospects for outperformance in the near term. Unfortunately, strongly undervalued stocks may be undervalued for a reason ' their earnings prospects are bleak! In this study are combine relative valuation measures with earnings momentum measures to determine stock performance. Using stocks within four industry groups, two each from consumer staples and consumer discretionary sectors, we use cross sectional regression analysis to test our hypothesis. The period of analysis is 2011-2012. The database finviz provides the data for the study.

Publication Date

4-17-2013

Project Designation

Independent Research

Primary Advisor

Robert D. Dean

Primary Advisor's Department

Business-Office of the Dean

Keywords

Stander Symposium project

Using Relative Valuation and Earnings Momentum to Measure the Returns to Stocks within Industry Groups

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