Formerly About Applied Materials Message Board

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Politics : Formerly About Applied Materials

AMAT 322.32

-5.6%

Jan 30 9:30 AM EST

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To: Joe Donato who wrote (4670)	5/20/1997 11:33:00 PM
From: EACarl	of 70976

RE <<<Does anyone here think AMAT is valued too high? Nothing against AMAT, it is a great company, but lets be reasonable the multiple is quite expensive for a company in this industry. Anyone agree? >>> Yes Joe, AMAT is a great company, and yes the valuation is being stretched at this point. Using consensus earnings estimates....... 70$/~2.19 earnings estimate 10/97 = PE 32. 70$/~3.31 earnings estimate 10/98 = PE 21. So, the real question is, how far does one want to look ahead? The peak of the next up-cycle AMAT can probably earn enough to make 70$ share price look cheap. It is one of the most expensive stocks in the sector now, but people are willing to pay a premium for the biggest company in the group. I do agree though, that it is looking expensive at this time, but that doesn't mean that it can't go higher. If you want to talk relative valuations, check out NVLS.... $83.75/~4.11 earnings estimate (not counting one time charge for litigation settlement) for year 12/97 = PE 20. $83.75/~5.49 earnings estimate for 12/98 = PE 15. So it is much cheaper than AMAT. I own both and will hold both. Hard to call the short term, and both should be higher long term. Also, as the recovery evolves those earnings estimates will probably start moving up as we have seen already.

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