Are Net stocks overvalued? I did a quick analysis of the stocks
that make up the DOT index - the data came from Yahoo's finance
site, and is listed below. Note that the stock and market
cap numbers are as of market close yesterday, July 16, 1999 -
while the sales and earnings numbers are from the year ending
March 13, 1999.
If you treated DOT as a single combined company, it would
have the following stats:
DOT Market Cap: $248 billion
DOT Sales: $8.65 billion
DOT Income: $119 million
DOT Earnings per share: $0.04
DOT Shares outstanding: 2.75 billion
DOT PE: 2067
DOT Price/Sales: 28
If you remove AOL from the DOT, then most stats are cut in half,
with PE going negative. Also note that DOT does not contain
EBAY. In my opinion, the DOT PE is very high, while DOT
Price/Sales is about where MSFT is at the moment. If DOT were
a company, then it would be my view that a $248 billion market cap
is too high with only $119 million in profits. As a
comparison, Microsoft has a market cap of $480 billion, about
double the DOT - and MSFT's sales are about $17 billion, again
about double that of the DOT. Yet MSFT's profit is $6 billion,
about 50 times that of DOT.
Fundamentally, one would think that DOT companies need to see a
major ramp in profits, or a decline in market cap. Of course this
is nothing new - everyone knows this - and to date, such thinking
has had no impact on market valuation. Yet, I think it
is interesting to look at the sector as a whole and trying to
imagine how you would view it as a single company. Personally,
I would not invest in DOT if it were a single company.
DOT Companies
Symbol Price Cap $B PE Sales ($M) Earn ($M) Shs M
AMZN 137.63 $22.24 NA $816.30 ($175.80) 161.6
AOL 119.89 $129.80 242 $4,190.00 $627.40 1080
BVSN 75.00 $1.90 262 $59.30 $7.47 25.3
CMGI 109.31 $10.42 330 $148.10 $55.70 95.3
CHKP 55.19 $1.95 35 $141.90 $65.50 35.4
EGGS 10.31 $0.32 NA $148.70 ($34.40) 30.7
EGRP 37.50 $8.75 NA $349.90 ($17.80) 233.2
ATHM 45.63 $11.47 NA $67.40 ($67.30) 251.3
SEEK 42.06 $2.60 NA $96.10 ($164.80) 61.8
INKT 123.00 $6.01 NA $53.20 ($23.50) 48.9
LCOS 104.75 $4.57 NA $109.40 ($36.50) 43.6
MACR 36.75 $1.56 86 $149.90 $19.80 42.4
MSPG 48.75 $2.99 392 $154.90 $6.38 61.4
NETA 19.94 $2.76 96 $1,010.00 $26.80 138.2
ONSL 18.94 $0.37 NA $235.40 ($16.00) 19.6
OMKT 14.94 $0.54 NA $62.50 ($27.90) 36
RNWK 86.63 $6.19 NA $75.90 ($6.22) 71.5
SDTI 20.75 $0.81 15 $179.80 $67.00 38.9
USWB 26.69 $1.98 NA $273.40 ($224.70) 74.2
YHOO 150.25 $30.71 377 $332.30 $38.80 204.4
Total $247 2067 $8,654 $119 2753
-Eric Wells |
