Barron's gives P/e ratios to Presidential Hopefuls:"And They're Off
Do Politics and P/Es Mix? One Think Tank Thinks So
Edited By Robin Goldwyn Blumenthal
Review | Follow-Up
Coming Earnings | Consensus Estimate | Dates To Watch For
The front-running Presidential candidates may not have differentiated
themselves much yet on the issues, but one research group thinks that may not
hold true when it comes to other measures.
TransAtlantic Futures, an online
think tank, weighed the current
$200,000 Presidential salary
against the funds raised to date
by each of six leading
candidates, and came up with
price-to-earnings multiples of
17 to 181.
Indeed, although George W.
Bush and Vice President Al Gore both scored in the highflying P/E range
typical of technology growth stocks, the Texas governor's multiple of 181 was
nearly double Gore's 91, mirroring Bush's $36.2 million war chest, which is
double the Vice President's. Bush, the leading Republican, was likened to
America Online, whose P/E was 200 before its recent report that fiscal
fourth-quarter earnings had nearly tripled. But Democrat Gore's more
"moderate" P/E was similar to Texas Instruments', before the company
reported an eightfold increase in second-quarter net. Bill Bradley also landed
in the growth camp, with a P/E of 58, the same as Nike's.
Campaign contributors "are certainly investing in something," says Daniel
Bachman, TransAtlantic's chief economist. "If the price-to-earnings ratio
looks that high, maybe the payoff comes somewhere else." The group hasn't
looked retrospectively at special interests' return on contributions.
The "value" players were Republicans: Arizona Sen. John McCain had a P/E
of 22, likened to the Washington Post's, while Elizabeth Dole scored a 17,
matching Philip Morris', as did Dan Quayle, paired with Sears, Roebuck, the
"all-American retailer of the pre-Internet Age."
But the P/Es could be halved if a Presidential pay raise comes through.
Although Kim N. Wallace, a political analyst at Lehman Brothers, doesn't see
much difference in the leaders' views on fiscal issues, he thinks a pay raise is
"a done deal." Handicapping that, Wallace adds: "Republicans on Capitol Hill
have calculated there's a better than even chance they'll be giving George
Bush $400,000 a year."
Day
Yields
When
Issued
Yields
Last
Auction
M
$15.0 bil.
3-month
4.49%
4.520%
6-month
4.495%
4.490%
W
$15.0 bil.
2-year
5.535%
5.754%
As of Friday afternoon.
SOMETIME THIS WEEK
The House votes on renewing most favored nation trade status with China.
MONDAY
Market guru Abby Joseph Cohen of Goldman Sachs discusses how to
position global portfolios at the AIMR Financial Analysts Seminar in
Evanston, Illinois.
The WTO is expected to give the U.S. permission to immediately impose
$116.8 million in annual penalty tariffs on European Union goods because of
an EU ban on hormone-treated beef.
A raft of companies split their stocks based on today's closing prices. Among
them: Lycos, McLeodUSA, National City, and PE, all 2-for-1, and
Telefonica, 3-for-1.
TUESDAY
Russia's prime minister, Sergei Stepashin, meets with Vice President Al Gore
and members of Congress.
Avondale Industries' shareholders vote on a $39.50-a-share cash bid by
Litton Industries.
Thailand markets are closed today and tomorrow.
WEDNESDAY
Fed Chairman Alan Greenspan testifies on monetary policy again, this time
before the Senate Banking panel.
AK Steel meets with analysts in New York, while Bethlehem Steel reports
what is expected to be a loss for the second quarter that J.P. Morgan's
Michael F. Gambardella estimates will total 25 cents a share, as a "weak steel
plate market and blast furnace reline obscures" the benefit of a slow recovery
in the sheet market.
Western Hemisphere energy ministers meet with the private sector in New
Orleans to discuss future energy infrastructure needs.
THURSDAY
How fast did the economy grow in the second quarter? The consensus
expects GDP to have slowed a bit to 3.4%, from the first-quarter's lively
4.3% pace.
The governing board of the National Association of Securities Dealers meets
to consider issues including a possible IPO of the Nasdaq stock market. (See
article)"
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