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Technology Stocks : Dell Technologies Inc.
DELL 133.20+5.7%3:59 PM EST
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To: Chuzzlewit who wrote (92173)1/28/1999 12:24:00 PM
From: jhg_in_kc  Read Replies (1) of 176387
 
Re: treading carefully and Dell/AOL valuation. What would you say to this line of reasoning by Joe E. (on the AOL thread.)?
From: Joe E.
Now that AOL has revenue growth less than 100%, it is closer to the day when it will be valued as a regular company. However, since profit growth is still >100% (by quite a ways) AOL's P/E is meaningless. Eventually profit growth will = revenue growth, more or less, and both will be less considerably than 100%. Until then P/E's matter little.

This is my opinion based upon watching how stocks are valued over the last several years. When growth is very fast, it seems the company might indeed grow to the sky. The valuation is based as much upon the size of the market in which they participate as upon the specific company results. When growth slows to a more normal pace, there are too many comparables around and variations in price are more easily arbitraged out.

Damn few public companies are growing either revenue or profits >100% per year in a way that looks like it can continue for an extended period of time. AOL is one, but is starting to to look more normal, more like say Microsoft or Cisco. Not yet, but soon. Say a couple of years.
Any thoughts?
jhg


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