You haven't given any explanation as to why GOOG stock is cheap, which was the discussion. GOOG has lots of potential, GOOG expenses options, GOOG is less expensive than YHOO are all fine and true comments, but that doesn't produce the conclusion GOOG stock is cheap.
GOOG trades at 35x trailing sales and 20x forward sales.
That's more expensive than EVERY tech stock in the S&P500! And you're telling me that GOOG is cheap?
Like it or not, price to sales IS a valuation metric and is useful. It compares the share price to the sales of the company - what else do you want? It's not the only valuation metric, but its certainly a common one in determining whether or not a stock is cheap.
As for earnings, GOOG trades at 52x 2006 EPS estimate of $8.54. Lets say that EPS is actually going to be $10. GOOG is still 41x than $10. That's among the 10% most expensive tech stocks that are operating at normal levels (ie, nor coming out of a downturn).
The only way to even say that GOOG is REASONABLY valued is to look at PE to Growth. GOOG's four quarter forward PE is 53x, and its EPS growth forecast for the next four quarters is 53% aboev the previous four quarters, so GOOG's PE to near term growth is 1.0x. THAT is reasonable, and perhaps a bit cheap, depending on whether you think 2007 EPS growth will be more or less than 2006 EPS growth. If 2007 is going to have higher EPS growth than 2006, then a PEG of 1x is low. If 2007 is going to have lower EPS growth than 2006 then a PEG of 1 is high.
Anyway, who's going to buy VCLK, that's what I want to know.... |
