Intel Corporation (INTC) Message Board

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Technology Stocks : Intel Corporation (INTC)

INTC 48.23

+2.3%

Feb 11 3:59 PM EST

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To: Brian S who wrote (5483)	11/19/1996 3:04:00 PM
From: Jim McMannis	of 186894

Brian, P/E ratios are typically based on trailing earnings not future earnings. Intel`s curent P/E ratio is 21. To determine whether or not a P/E ratio is high or not you need to do a couple of things. One is to compare it industry wide by comparing it to P/E`s of similar companies. Two is to relate it to growth prospects i.e. future earnings. Companies in their growth phases typically carry higher P/E ratios than more mature companies. One mistake Wall Street makes concerning the computer industry is that they expect it to be cyclical. They have be wrong about this for many years. One would think a juggarnaut monopoly growth company like Intel would carry a higher P/E ratio...after all Microsoft carries one of 40. I can`t really explain it other than that earnings keep rising at such a pace that the stock price is psycologically unable to catch up P/E wise. The capitalization also gets mind boggling at a P/E ratio of say 40 and apparently Wall Street can`t fathom that yet. Not long ago Intel had a P/E of just 13. It sat there. Finally people woke up. The stock market can act unrationally for great stretches of time...<G> Regards, Jim

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