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Price to sales is a more telling comparison here. P/E can appear arbitrarily high/low depending on what the company is optimizing for. A realistic "terminal mar
by adam_arthur 3y ago
Price to sales is a more telling comparison here. P/E can appear arbitrarily high/low depending on what the company is optimizing for. A realistic "terminal margin" is pretty similar between like-kind businesses, so you can somewhat assume what it will be in the long run and apply that to projected revenues.
Price to Sales: (TTM revenues)
NVDA: 37x
AMD: 8x
TSLA: 8x
TSM: 7x
AAPL: 7x
GOOG: 6x
QCOM: 3x
- JumpinJack_Cash 3y agoPrice to FCF (Free cash flow) is even better.
- aeyes 3y agoPrice to free cash flow after deducting stock based compensation is even better
- josu 3y agoI just look at the market cap.
- adam_arthur 3y agoFCF is not great for tech companies because SBC (stock based compensation), of which these companies do a huge amount of, tends to be backed out. When a tech employee receives shares, it dilutes other shareholders. This is not "free" money to be ignored just because it doesn't take cash to pay it
- varelse 3y ago[dead]