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Technology Stocks : INTEL SUPPORT GROUP - the sky is falling!!!!
INTC 37.04-6.2%Nov 4 3:59 PM EST
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To: Zachary Fluhr who wrote (30)3/14/1996 2:11:00 PM
From: Ira Vine   of 248
 
Here is the reason why there must be some relationship between growth rate and earnings: If a company is growing at, say, 20%, its earnings will double every 3.5 years. That means if the price stays the same the P/E would be halved. Eventually with that kind of growth, if the price didn't move, the company would be taken over just for the cash it generates. The trouble is, P/E's, like many financial measures, reflect anticipation of future earnings. The reason Coke has such a high multiple is that investors anticipate it will grow at 9% forever, while Intel (and some other semi's) are being priced as if their growth will slow and even shrink. I'm not sure if the market will ever view Intel the way it views Coke; but you can still make money if your prediction for Intel's future earnings is more accurate (and higher) than the market.
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