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Citron Research says that with a P/E ratio of over 100, shares of Cbeyond (CBEY -4.5%) could...

Citron Research says that with a P/E ratio of over 100, shares of Cbeyond (CBEY -4.5%) could fall by 2/3 and still be seriously overpriced: "The growth story the company wants Wall Street to believe is pure fiction."
Comments (2)
  • Jake Huneycutt
    , contributor
    Comments (1353) | Send Message
     
    Citron might be right about their business model being flawed, but I think they make a too big of a deal about the P/E. CBEY's earnings were low over the most recent year. That distorts the P/E and makes it a very useless figure. If CBEY had $8 in net assets and the stock was selling for $2, it wouldn't necessarily be a bad deal just because they earned 5 cents per share on the most recent year.

     

    All the same, it does look overpriced to me and Citron brings up some pretty legitimate criticisms about its churn rate and failure to successfully penetrate new markets.
    7 Jul 2009, 01:18 PM Reply Like
  • herbert hoover
    , contributor
    Comments (2005) | Send Message
     
    PEs of 100 will be pretty common once earning season gets underway.
    7 Jul 2009, 01:55 PM Reply Like
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