Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : News Links and Chart Links -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (5162)	1/27/2003 12:11:02 PM
From: Softechie	Respond to of 29609

The Price of Stocks: Average P/S and P/E Ratios 27-Jan-03 08:27 ET [BRIEFING.COM - Robert V. Green] For nearly two years, we have been stating that a major theme of the market is a return to traditional valuations. Now that this trend appears to be finalizing, it is time to measure the "average" price of stocks. The "Price" Of A Stock With almost everything you buy, you have a general sense of whether the purchase is "cheap" or "expensive." In the stock market, cheap or expensive is defined by the "multiple" that you pay for the stock. The most common multiples are the price/earnings ratio and the price/sales ratio. The dollar amount is meaningless, generally, (except for stocks under $5, which often prevents institutions from buying the stock.) The market values the overall business with each individual share representing a prorated portion of that value. Therefore, to determine whether your stock is "cheap" or "expensive," you should compare the price/earnings ratio and price/sales ratios of your stock to the average ratios of comparable stocks. The following tables list the average multiples for all stocks in the market, except for stocks trading on the bulletin board system. We have segmented the stocks by the size of their revenue and their sector. Foreign stocks are not included. Note that the price/earnings ratio averages do not include companies with losses. Average P/S and P/E: Revenue Less Than $100 Million Sector Avg Market Cap Price/Sales Price/Earnings Revenue Growth Basic Materials 82.5 10.6 25.2 9.0 Capital Goods 36.3 1.8 22.4 38.0 Conglomerates None NA NA NA Consumer Cyclical 33.6 2.6 37 14.7 Consumer/Non-Cyclical 26.2 0.9 21.2 23.8 Energy 79.0 4.6 97.2 -18.9 Financial 103.3 12.4 24.1 -0.5 Healthcare 122.4 40.1 57.1 88.2 Services 72.2 6.6 58.5 43.8 Technology 67.1 10.2 77.6 -2.0 Transportation 17.4 0.4 61.2 -5.4 Utilities 102.5 2.6 17.2 -5.1 Note that with smaller companies, the revenue growth averages can be distorted by small companies with extreme revenue growth from a very small prior year number. Note: Healthcare includes biogenetic development-stage companies. Average P/S and P/E: Revenue $100 to $500 Million Sector Total Market Cap Price/Sales Price/Earnings Revenue Growth Basic Materials 182.4 0.8 17.3 0.2 Capital Goods 200.0 0.7 26.6 -0.6 Conglomerates None NA NA NA Consumer Cyclical 175.9 0.6 24.9 5.2 Consumer/Non-Cyclical 201.5 0.8 28.8 5.2 Energy 418.0 1.9 44.5 -3.3 Financial 559.2 2.5 16.5 3.9 Healthcare 591.0 2.5 42.1 42.2 Services 401.1 1.6 48.9 12.9 Technology 383.6 1.7 60.1* -3.0 Transportation 197.0 0.8 33.7 -1.1 Utilities 396.6 1.3 19.3 1.2 * 208 of the 320 technology stocks in this revenue segment have negative earnings and are not included in this average. Average P/S and P/E: Revenue Greater Than $500 Million Sector Total Market Cap Price/Sales Price/Earnings cRevenue Growth Basic Materials 2,352 0.7 28.4 3.2 Capital Goods 2,120 0.5 16.3 6.5 Conglomerates 21,617 1.1 19.8 -6.1 Consumer Cyclical 2,470 0.6 23.5 2.8 Consumer/Non-Cyclical 9,372 1.0 20.8 11.6 Energy 7,228 1.5 35.8 -4.4 Financial 7.772 2.0 30.1 4.1 Healthcare 12,807 2.3 39.9 15.4 Services 4,438 1.2 28.7 8.9 Technology 6,900 1.8 39.7* -0.1 Transportation 3,361 0.7 37.1 -1.3 Utilities 3,422 0.8 13.8 -10.4 * 83 of the 213 technology stocks in this revenue segment have negative earnings and are not included in this average. Closing Words The "average" prices listed above are only reference points for general comparison. If your stock is cheaper than the average price above, there may be a reason that you should be aware of. If your stock is more expensive than the above averages, there had better be a good reason that justifies it. Multiple expansion for the overall market is unlikely, in general, for the coming year, given modest economic improvement. The best argument for an increase in stock price for any individual company is improved business performance. If you can find a stock with good prospects for improved business and is cheap compared to the average price of stocks in the same sector with similar revenue, it is likely that a good investment premise can be developed. Comments may be emailed to the author, Robert V. Green, at rvgreen@briefing.com Source for fundamental data on which this analysis is based: Marketguide

To: Les H who wrote (5162)	1/27/2003 12:11:39 PM
From: Softechie	Read Replies (1) \| Respond to of 29609

Bounce is when CNBC mentioned shorting stocks...heheheh

To: Les H who wrote (5162)	1/27/2003 12:29:54 PM
From: Les H	Read Replies (3) \| Respond to of 29609

ANOTHER DROP IN PRODUCTION jefco.com Industrial production fell at a 2.4 percent annual rate in December. Output has now dropped four out of the past five months. A large part of the decline was due to a fall-off in automobile output. But there is more to the story. The downswing in U.S. production is related to the recent upsurge in imports. For example, in November imports rose to $123.3 billion, up from $98.1 billion in July – a 77 percent annual rate of gain. The ending of the West Coast dock strike was only part of that upturn. The underlying issue was a growing trend to outsource U.S. production and import manufactured products. This trend is now gaining size. One implication, points to profits in shipping, insurance and international banking. Stocks of these companies would benefit. Another is U.S. employment would remain in the doldrums. Large tax benefits would be needed to offset this. A third is that U.S. companies with major international operations would benefit, especially those in parts of Asia, where manufacturing is thriving. Tracy Herrick 01/19/03 Information is believed to be correct, but there is no guarantee.