As industry conditions worsen, and the stock bottoms, the E approaches zero, and the PE approaches infinity (even as the stock approaches almost-zero). Then, you reach the place on the curve where all the numbers become absurd, the "discontinuity", the asymptote. In real numbers and real profits, you can't calculate a PE anyway, because the E is a negative number (see GAAP in latest report). That's where we are now.
However, based on expected 2012 earnings, I calculate a very low PE. And, since it's a Gorilla, and I see no discontinuous innovation, I can be confident of those earnings, and know that I hold a safe stock (which the market, as always, is severely undervaluing). |
