Whenever someone talks pe ratio, I always ask myself what pe ratio he
is talking about, 12 month trailing pe or 12 month forwarding pe. As
far as CSCO 12 month trailing pe goes, it looks very high. But, if I
take those R&D acquisition expenses out of the picture, the pe ratio
will change dramatically. Since CSCO is a company keeping buying other
companies over its life, the trailing pe ratio does not really mean
much. What is really counted for, however, is the forwarding 12 month
pe. In my calculation, it is about 62 to 63. It is about double of its
30% growth rate. In my judgement, it is overvalued. But if you look
around, and find AOL, AMZN, EBAY, BRCM, RMBS, MSFT, DELL, and LU are
the same and even more. This market is over valued not just CSCO. I
think it probably Ok to hold on to it.
Cheers!
Mike |
