4 ms·

> I don't see anything unbelievable or even particularly unusual. Let's go back in time to a point when Apple's #'s roughly matched Googles. https://www.apple

by czhiddy 11y ago

> I don't see anything unbelievable or even particularly unusual. Let's go back in time to a point when Apple's #'s roughly matched Googles. https://www.apple.com/pr/library/2011/10/18Apple-Reports-Fourth-Quarter-Results.html https://www.apple.com/pr/library/2011/10/18Apple-Reports-Fou... $28.27b revenue, $6.62 profit. In 2011, Apple's P/E ratio hovered around 14, with a stock price that fluctuated around $46-$56 throughout the year: http://financials.morningstar.com/valuation/price-ratio.html?t=AAPL http://financials.morningstar.com/valuation/price-ratio.html... http://www.nasdaq.com/symbol/aapl/historical http://www.nasdaq.com/symbol/aapl/historical A P/E ratio of 14, and the company basically tripled their numbers in ~4 years. Does Google's P/E of 35.7 suggests we can look forward to a rough 10x increase in Google's numbers over the next 4 years?

nl 11y ago
A P/E ratio of 14, and the company basically tripled their numbers in ~4 years. Does Google's P/E of 35.7 suggests we can look forward to a rough 10x increase in Google's numbers over the next 4 years? No, it means that investors didn't believe there was much room for further growth at Apple[1]. They were clearly wrong! (Note that if you think that they are still wrong then there is a good opportunity to make money here!) (Also, P/E is often related to margin as well as growth potential. Google's better profit margin is a factor here). [1] http://www.asymco.com/2011/03/24/analysts-apples-growth-next-year-to-drop-to-half-of-what-it-could-obtain-during-the-recession/ http://www.asymco.com/2011/03/24/analysts-apples-growth-next... - the quote here is "The P/E ratio has remained at despondent levels for over two years.... The logical explanation is that pricing reflects a consensus that growth will fall off a cliff... Growth may slow to 18 percent the following year."

by czhiddy 11y ago

nl 11y ago

A P/E ratio of 14, and the company basically tripled their numbers in ~4 years. Does Google's P/E of 35.7 suggests we can look forward to a rough 10x increase in Google's numbers over the next 4 years? No, it means that investors didn't believe there was much room for further growth at Apple[1]. They were clearly wrong! (Note that if you think that they are still wrong then there is a good opportunity to make money here!) (Also, P/E is often related to margin as well as growth potential. Google's better profit margin is a factor here). [1] http://www.asymco.com/2011/03/24/analysts-apples-growth-next-year-to-drop-to-half-of-what-it-could-obtain-during-the-recession/ http://www.asymco.com/2011/03/24/analysts-apples-growth-next... - the quote here is "The P/E ratio has remained at despondent levels for over two years.... The logical explanation is that pricing reflects a consensus that growth will fall off a cliff... Growth may slow to 18 percent the following year."