TGW, low P/E has everything to do with the present, future and perception. Perception is, of course based on past results and future expectations.
To reiterate, IN GENERAL, when earnings are high, p/e tends to rise less in proportion to earnings, yet when earnings are low, p/e tends to be higher, relatively speaking.
Case in point, GTW (gateway 2000). Earnings were doing nice, good 30% growth. P/E is around 20. Now that earnings have gone down, p/e is about 45.
PX's argument with MU is flawed. All that proved was p/e moved down with stock price! Also, story stocks don't really prove anything, except how irrational the market is. He might as well have used IOMG's runup last year to $55 to prove his point.
So back to original argument of why WDC won't see $15. P/E is low now because expectations are low. Once those expectations are met, we would have a p/e of 14.5 at these levels. That is within WDC's historic range, and not unrealistic assuming the fundamentals would start to improve at that point.
Maybe you need to go to the library...
Brian |
