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Technology Stocks : Dell Technologies Inc.
DELL 133.20+5.7%3:59 PM EST
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To: John Trader who wrote (35203)3/22/1998 4:11:00 PM
From: Chuzzlewit  Read Replies (1) of 176387
 
John, there are several reasons for P/E expansion, and before ascribing the expansion to excessive optimism it is worth considering them:

1. Interest rates are falling.
2. The rate of long-term growth is increasing
3. The perception of the risk in achieving expected free cash flows has decreased.

Any one of those factors will cause the P/E to rise. The other point is that the P/E's you refer to are backward looking. A better gauge would be forward-looking multiples based on consensus estimates.

Regards,

Paul
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