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Strategies & Market Trends : Value Investing
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To: James Clarke who wrote (5218)10/30/1998 7:44:00 PM
From: Investor2  Read Replies (1) of 78530
 
Very interesting rationale; thanks.

If I understand you correctly, adding the amortization expense back to earnings results in a lower "P/E." The higher the goodwill amortization expense, the lower the "P/E." Therefore, the lowest "P/E" would would result from the highest goodwill. In other words, the more the company overpaid for its acquisition, the better its "P/E" will be.

How do you address the issue of goodwill being much larger than the true value?

Thanks,

I2
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