(PE 13.4, earnings growth 7.3%, PEG 1.83). For the past 50 years (PE 12.7, earnings growth 5.7%, PEG 2.2). I
these are historical numbers. that is, ttm PEs, and historical earnings growth rates. in contrast, when you look at QCOM, you use forward pro forma PEs, and rely on forward analyst consensus estimates of earnings/handset growth, which are almost always laughably wrong.
i think it would be better to look at QCOM's PE as being around 40 (and even this is incredibly generous because it is based on their pro forma fantasy, as opposed to the harsh reality of the GAAP and S&P core earnings), and its growth as around 6% long term (you need to average in all the zero-growth years, like the last three). this puts its PEG at about 6.6666. do you still like the PEG?
more importantly, you should learn from this example that a figure such as PEG is extremely easy to manipulate. your own low PEG for QCOM is entirely dependent on accepting their pro forma numbers as "real earnings", and the belief that QCOM will somehow achieve some crazy long term earnings growth like 35%. i would mention again that Warren Buffett thinks almost no S&P500 cos will achieve 15% compound earnings growth over the next decade, and that it's impossible to predict which small handful of cos may be lucky to achieve even that rate.
you, on the other hand, are assuming more than twice the long term growth rate that the world's greatest investor thinks is nearly impossible. didn't you notice that earnings went nowhere the last three years even as CDMA was supposedly taking over the world?
as for your 35% target, all i can say is: Good Luck! |
