Rajeev Seth's  Instablog

Rajeev Seth
Send Message
Rajeev Seth is the Managing Director of BeatIndex, an investment management consulting firm. Specializing in quantitative investment management, he has consulted for many diversified asset managers, and startup hedge funds. The philosophy of BeatIndex is that one can indeed beat indexes, by a... More
My company:
My blog:
Rajeev Seth's Blog
  • Twitter Is A Fairly Valued Hyper-Growth Stock, Google Safer Bet, And Apple No Longer A Growth Stock 0 comments
    Nov 9, 2013 12:28 PM | about stocks: TWTR

    Twitter (NYSE:TWTR) is fairly valued in reference to its sister stocks in the universe in which it is considered.

    A statistical analysis I had done of Interenet stocks when they went public had shown that markets valued them on comparables based on their EPS growth rate and Revenue growth rates.I had found that to be true even amongst the Internet stocks valued by the market when Google was going public (Aug 2004) at $85 per share. GOOG is now at $1000+ per share because it has grown justifying its EPS and revenue growth rates. There were some quarters when its EPS was growing at 500% per quarter ! Clearly, its current market price/market cap reflects the cash flow growth it realized.

    So, IMHO, Twitter is not unfairly overvalued today as a study I just ran on various Internet stocks based on the data my R program just fetched from the Yahoo Finance Key Statistics pages of these stocks. Of all the Internets shown below,Twitter leads the pack with 105% revenue growth rate !

    I am not advising anyone to buy TWTR, simply saying that its price is supported by factors I have found to be statistically supported

    If you do buy TWTR, do it with usual risk management in place: diversify well, with sector, asset class exposure etc

    To me, GOOG is a safer bet and has a whopping 36% EPS growth rate in place. AAPL is no longer a growth stock with its negative EPS growth rate and revenue growing at 4%



    Trailing P/E 13.09 27.63 121.25 965.11 N/A 4.51 N/A N/A 42.07 N/A 29.45 N/A
    Forward P/E 10.89 19.47 42.33 96.51 N/A N/A 37.76 329.26 N/A N/A 0.81 106.4
    PEG Ratio 0.84 1.4 1.86 2.44 N/A N/A 0.72 -29.44 N/A -1.99 1.13 20.27
    Price/Sales 2.7 5.87 16.82 18.23 45.76 0.97 9.08 20.08 11.53 2.89 10.07 8.78
    Price/Book 3.73 4.06 8.86 9.96 29.91 1.71 4.58 20.77 12.77 1.5 8.32 52.46
    Enterprise Value/Revenue 2.6 5.15 16.32 17.32 NaN 0.9 7.42 21.32 11.74 1.8 9.74 8.67
    Enterprise Value/EBITDA 7.97 16.79 35.53 142.81 N/A 2.28 284.12 -6.09K 31.68 12.72 22.64 -114.9
    Fiscal Year Ends 28-Sep 31-Dec 31-Dec 31-Dec 31-Dec 31-Mar 31-Dec 31-Dec 31-Dec 31-Dec 31-Dec 31-Jan
    Most Recent Quarter 28-Sep-13 30-Sep-13 30-Sep-13 30-Sep-13 30-Sep-13 30-Jun-13 30-Jun-13 30-Sep-13 30-Jun-13 30-Sep-13 30-Sep-13 31-Jul-13
    Profit Margin 21.67% 21.66% 15.15% 2.49% -26.67% 21.81% -2.17% -6.54% 27.89% -5.98% 35.38% -9.26%
    Return on Equity 30.64% 15.55% 7.65% 2.05% N/A 42.59% -1.08% -7.85% 35.22% -3.24% 32.74% -53.59%
    Qtrly Revenue Growth 4.20% 11.90% 59.70% 55.90% 104.80% 9.60% 19.70% 68.20% 36.60% -36.00% 40.50% 55.40%
    Gross Profit 64.30B 29.54B 3.72B 846.79M N/A N/A 281.40M 127.64M N/A 929.10M 706.40M 136.38M
    Qtrly Earnings Growth -8.60% 36.50% N/A N/A N/A -4.20% N/A N/A 18.70% N/A 116.80% N/A

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: TWTR
Back To Rajeev Seth's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.