Thread,
The gorilla game is a game that is not based upon quantitative analysis. The
book, in a way, says ignore the financials and valuations because there's no
way to determine how much a Gorilla will be worth. It will grow beyond
everyone's expectations...
Well, while I can accept that it can become bigger than I can foresee, there's
still a limit on the value the market will put on such a stock. So I went back and
looked at the valuations assigned to four Gorillas over the past 7 years.
Figures are shown for CSCO, INTC, MSFT, and ORCL.
The figures show the year end range over the past seven years for price
multiples for earnings, sales, cashflow, and book value. Stock price over 7 yrs
is shown, as are margins, ROE, and LTD/Eq.
price PE PS P/CF P/Bk margins ROE LTD/Eq
CSCO 3 to 75 30 to 58 6 to 10 24 to 49 10 to 14 16 to 26 24 to 38 0
INTC 6 to 71 11 to 19 2 to 5 8 to 14 2.3 to 7 17 to 27 18 to 36 2 to 8
MSFT 9 to 84 27 to 50 7 to 15 22 to 42 7 to 15 24 to 30 25 to 35 0
ORCL 2 to 23 30 to 75 1.4 to 6 21 to 34 4 to 14 -1 to 15 -4 to 38 0 to 22
In recent months CSCO and MSFT have been pushing Gorilla valuations into
never before seen territory on a valuation basis, so it's interesting to see how
far this can go on.
Comparing historical gorilla valuations to current gorilla cantidates might allow
us to see when company's stock prices are getting ahead of themselves... At
least I hope this might give us a little direction.
Shane |
