Over the years, I’ve learned that one of the fastest ways to look like a fool is to point out valuation anomalies. Such idiosyncrasies can very well matter, but in the face of fast-growing companies they can also give false-positive results.
Still, glutton for punishment that I am, I thought I’d point out a few that might be worth noting on some of the investment world’s (currently) favorite companies: Intel (INTC), Google (GOOG) and Apple (AAPL):
Intel trades at 14.6 times expected earnings, according to Factset. Other than the past few weeks, when its multiple slipped to 13.9-times, it hasn’t traded at these levels since July of 1996. Yet its stock, currently at $20, was $10 that last time the multiple was in such a slump. Making matters worse: Lest you think Intel is the grower it once was, annual sales have been flat over the past three years.
Google, meanwhile, trades at 23.6 times. Though a slight up-tick from recent weeks, it’s still hovering at its lowest levels ever, thanks in large part to a recent near-halving of its stock. When it went public in August 2004, it traded at 52.3-times expected earnings, rising to a multiple of 65.3 in July of 2006. Yet its stock, now $444, was $100 when its multiple was the former and $386 when it was the latter.
Finally, Apple, at 22.1-times, hasn’t been valued lower than this since December 2000. It was in full glory in June of 2003 when it boasted a multiple of 82.3-times earnings.
However, at its prior trough its stock traded at around $7.50. At the multiple’s peak, it was in the $9s. Now it’s $124.
Interpret at will.
The beat goes on…