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A Comparative Analysis of Price-to-Earnings (P/E) Ratios in the Tech and Retail Sectors

Shweta S Raikar

Abstract


This paper studies the Price-to-Earnings (P/E) ratios of the tech giants Apple and Microsoft, and retail leaders Amazon and Target over a 5-year period (2019-2023). The study looks at trends within the tech and retail sectors and uses statistical methods to check if there exists a significant difference in the average P/E ratio between the two quotes. A t-test was performed to compare the means for those stocks assuming all else held similar. The results show that the tech sector P/E is higher in general than that of the retail sector, correctly representing higher growth expectations and investor optimism. The current study, however, acknowledges the shortcomings of P/E and its applicability to cross-sectoral comparison.


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References


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