Great Article! NASDAQ 100 REVISITED -->
24-May-01
Nasdaq 100 Revisited [BRIEFING.COM - Gregory A. Jones] In a Stock Brief on March 30 of this year, we broke down the Nasdaq 100 index to see just how the P/E (price/earnings ratio) could be 100 -- a frightening figure that was oft-cited at the time. As it turned out, the P/E of the index was 100, but that figure was seriously distorted by a minority of stocks that were posting losses. Today, we revisit the Nasdaq 100 to see where valuations stand after the April/May rally.
Perhaps the most disturbing part of this exercise was the realization that prices have soared over a period in which earnings estimates have plummeted. Since March 30, we found that 65 of the Nasdaq 100 stocks had seen earnings estimate reductions for the next fiscal year, versus just 15 that had seen increases. These were not just cuts in estimates for the coming quarter; they were for full fiscal years that in some cases extended through early 2003. So even with all of the Fed rate cuts, analysts have become much more pessimistic on the prospects for individual companies.
The Overall P/E
We reported on March 30 that when you remove the 21 companies that had lost money over the past four quarters, the Nasdaq 100 P/E was actually a more reasonable 33. But the run-up in prices since then has catapulted that P/E to 43. Even when we looked at forward P/Es to get a sense of whether the high valuations were a temporary function of the downturn, we saw more of the same. Using estimates for the next fiscal year, the forward P/E for the 79 companies expected to earn a profit was 39 (note that fiscal years are different from one company to the next, so it's not an apples-to-apples in comparing forward P/Es of individual companies).
Trailing Twelve Months
As we did last time, we offer a breakdown of the 100 individual Nasdaq stocks. First, we look at the 79 money-makers, ranked from highest to lowest P/E based on TTM (trailing twelve month) earnings. Based on reader requests from last time, we also include future P/Es and the price used in the calculation (the Wednesday, May 23 closing price).
Note: We have removed VoiceStream (VSTR) and added Nvidia (NVDA); this change has been announced by the Nasdaq but is not effective until May 31.
Ticker TTM P/E Forward P/E Price
NOVL 460 29 4.60
CNET 209 -- 12.52
EBAY 191 91 60.99
AAPL 179 28 23.24
GMST 159 28 38.11
RFMD 146 110 30.75
VRSN 138 61 62.00
IDPH 133 69 57.00
BEAS 130 63 39.00
BRCD 130 98 47.94
ITWO 116 116 25.60
PSFT 108 49 40.99
VRTS 107 65 73.85
CIEN 103 55 62.55
RNWK 101 94 14.12
MERQ 88 58 68.38
SEBL 85 65 50.20
NTAP 80 62 25.56
ERICY 78 44 6.99
SPOT 74 108 35.75
JNPR 72 47 53.51
PMTC 71 25 12.80
NVDA 65 40 92.00
QCOM 61 51 67.32
PAYX 61 47 39.10
CHIR 60 49 52.20
CHKP 59 35 60.80
AMGN 59 45 64.00
TMPW 58 31 59.95
QLGC 54 39 55.51
IMNX 54 56 16.30
YHOO 54 146 20.40
MEDI 53 36 38.50
CEFT 52 32 48.60
BBBY 51 34 29.95
SBUX 49 35 20.08
CTXS 48 30 27.60
AMCC 48 79 23.68
MXIM 46 49 54.49
GENZ 46 35 104.80
PALM 46 -- 6.39
BRCM 45 109 42.42
VTSS 44 82 32.15
PMCS 43 74 39.10
CMVT 42 30 62.80
LLTC 41 44 53.52
CSCO 41 77 22.32
FISV 40 29 55.82
XLNX 39 44 45.42
MSFT 39 36 69.70
ORCL 38 32 16.87
CTAS 38 32 48.00
BMET 38 31 43.25
ADBE 38 30 44.00
INTU 37 33 33.21
SUNW 36 41 21.50
RATL 35 48 25.40
BGEN 34 28 60.36
JDSU 33 70 22.34
DELL 33 31 26.74
FLEX 32 22 28.46
MOLX 30 30 39.06
ALTR 29 45 27.40
SANM 29 27 33.85
KLAC 28 54 55.50
SPLS 28 20 16.35
COST 27 25 36.81
CPWR 25 18 11.11
TLAB 24 22 40.40
MCHP 22 30 25.87
AMAT 22 47 52.99
ATML 22 31 12.75
NVLS 20 30 52.41
CMCSK 20 -- 41.70
INTC 20 38 28.83
ADCT 19 31 9.68
SSCC 17 9 14.70
WCOM 12 16 18.65
PCAR 12 18 48.87
Next, we look at the money losers. Since P/E ratios are meaningless for these companies, we ranked them by price/sales ratios based on trailing twelve month sales.
Ticker TTM P/S Price
HGSI 271.6 66.50
ABGX 50.6 39.96
MLNM 40.8 40.85
MFNX 13.1 5.04
ERTS 6.3 59.75
DISH 5.5 34.00
EXDS 4.7 8.79
INKT 4.5 8.95
BVSN 4.4 7.10
ARBA 3.8 6.67
LVLT 3.3 13.00
ATHM 3.2 5.04
MCLD 2.5 6.28
NXTL 2.2 17.50
ADLAC 2.1 37.95
USAI 2.0 25.85
AMZN 1.9 15.60
XOXO 1.6 3.80
CNXT 1.4 10.00
CMGI 1.4 5.25
COMS 0.7 6.20
Looking Forward
Though we have already had a glance of the forward P/E ratios above, here is another table that ranks those companies expected to earn a profit in the coming fiscal year by the forward P/E ratio. Past P/E ratios and price are also included.
Ticker Forward P/E TTM P/E Price
BVSN 177.5 -- 7.10
YHOO 145.7 53.7 20.40
ITWO 116.4 116.4 25.60
RFMD 109.8 146.4 30.75
BRCM 108.8 45.1 42.42
SPOT 108.3 74.5 35.75
BRCD 97.8 129.6 47.94
RNWK 94.1 100.9 14.12
EBAY 91.0 190.6 60.99
VTSS 82.4 44.0 32.15
DISH 79.1 -- 34.00
AMCC 78.9 48.3 23.68
CSCO 77.0 40.6 22.32
PMCS 73.8 43.4 39.10
JDSU 69.8 33.3 22.34
IDPH 68.7 132.6 57.00
SEBL 65.2 85.1 50.20
VRTS 64.8 107.0 73.85
BEAS 62.9 130.0 39.00
NTAP 62.3 79.9 25.56
VRSN 60.8 137.8 62.00
MERQ 57.9 87.7 68.38
IMNX 56.2 54.3 16.30
CIEN 55.4 102.5 62.55
KLAC 53.9 28.3 55.50
QCOM 50.6 61.2 67.32
PSFT 48.8 107.9 40.99
CHIR 48.8 60.0 52.20
MXIM 48.7 45.8 54.49
RATL 47.9 35.3 25.40
PAYX 47.1 61.1 39.10
AMAT 46.9 21.6 52.99
JNPR 46.5 72.3 53.51
AMGN 45.1 58.7 64.00
ALTR 44.9 29.1 27.40
LLTC 44.2 41.2 53.52
ERICY 43.7 77.7 6.99
XLNX 43.7 39.5 45.42
SUNW 40.6 36.4 21.50
NVDA 40.0 65.2 92.00
QLGC 38.8 54.4 55.51
INTC 37.9 19.9 28.83
ERTS 37.6 -- 59.75
MEDI 36.0 53.5 38.50
MSFT 35.7 38.5 69.70
GENZ 35.3 45.8 104.80
SBUX 35.2 49.0 20.08
CHKP 34.5 59.0 60.80
BBBY 33.7 50.8 29.95
INTU 33.2 37.3 33.21
ORCL 32.4 38.3 16.87
CTAS 32.0 38.1 48.00
CEFT 32.0 51.7 48.60
BMET 31.3 37.6 43.25
ADCT 31.2 18.6 9.68
ATML 31.1 21.6 12.75
TMPW 30.9 58.2 59.95
DELL 30.7 32.6 26.74
NVLS 30.5 20.5 52.41
CTXS 30.3 48.4 27.60
ADBE 30.1 37.6 44.00
MCHP 30.1 22.5 25.87
CMVT 29.6 42.4 62.80
MOLX 29.6 29.8 39.06
FISV 29.4 39.9 55.82
NOVL 28.8 460.0 4.60
AAPL 28.3 178.8 23.24
GMST 28.0 158.8 38.11
BGEN 27.9 33.5 60.36
SANM 27.3 28.7 33.85
PMTC 25.1 71.1 12.80
COST 24.7 27.3 36.81
FLEX 21.7 31.6 28.46
TLAB 21.7 23.6 40.40
SPLS 19.7 27.7 16.35
CPWR 17.9 25.3 11.11
PCAR 17.6 11.7 48.87
WCOM 15.5 12.2 18.65
SSCC 8.7 16.7 14.70
And finally, here are the companies expected to lose money in the coming fiscal year, ranked by their forward price/sales ratios.
Ticker Forward P/S Price
HGSI 171.8 66.50
ABGX 67.1 39.96
MLNM 31.5 40.85
INKT 5.5 8.95
CNET 3.9 12.52
ARBA 3.7 6.67
CMCSK 3.6 41.70
MFNX 3.2 5.04
ATHM 2.4 5.04
CNXT 2.3 10.00
EXDS 2.2 8.79
LVLT 1.9 13.00
PALM 1.7 6.39
ADLAC 1.7 37.95
MCLD 1.5 6.28
USAI 1.5 25.85
NXTL 1.4 17.50
CMGI 1.4 5.25
AMZN 1.4 15.60
COMS 0.9 6.20
XOXO 0.7 3.80
What It Means
Different people will have different reactions to these valuations. Undoubtedly, some will be relieved that the P/Es weren't 100 given that this figure is still mentioned occasionally. But there is still plenty of cause for concern here. P/E ratios have risen sharply over a period when earnings estimates and growth rates have been revised consistently lower. Forty-one of the 79 money makers next year have P/E ratios in excess of 40. That's not cheap given that we have yet to see the bottom in this corporate earnings cycle. This is not intended as a scare tactic, however -- our goal today was simply to lay out the data for all to see. |
