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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Mary Cluney who wrote (54510)	4/26/1998 9:46:00 AM
From: gnuman	Read Replies (2) \| Respond to of 186894

Mary, Here's an interesting chart showing the P/E ratio of the S&P 500 since 1935. Note the average over time is around 15. Also, the current P/E ratio is at the high end of the historic scale, over one deviation above average. Also, I wonder how you arrived at an average P/E in the 80's for NASDAQ companies? Seems high to me. lfcity.com

To: Mary Cluney who wrote (54510)	4/26/1998 12:22:00 PM
From: Sr K	Read Replies (1) \| Respond to of 186894

Mary, I think you have to exclude negative EPS, which include purchased R&D writeoffs, and other one-time events, as well as startup investments to build market share. This is how Barra does it, which Forbes reports each issue. You'll get a lower P/E.

To: Mary Cluney who wrote (54510)	4/26/1998 1:21:00 PM
From: Thomas J Pittman	Respond to of 186894

Re: This is a frightening thought. I hope you aren't saying this just to scare us. Not at all. But I can tell you as a holder of Intel at that time, it was both frustrating and scary. That I DO state with assurance since I was holding at the time. I am not at all alarmed by the Average PE of the NASDAQ since I dont own it. Intel is currently sporting the highest PE of anything that I am holding (recently dumped my LRCX). My only point was to observe Intel's past PE ranges (and even the ranges vary depending on which PE you watch). For me, a company's historical valuations, as accorded by the market, does have value -- not decisive of itself, but value in determining the attractiveness of the company's stock. I will add that (all info from e-trade research web pages) Intel is currently at ~27x estimated 98 earnings. This is substantially above its average high of the last 6 years. The low PEs during 93, 94, 95, 96 were 11, 10, 10, and 12 respectively. Its PSR is 5.6, ~30% higher than its average high of the period 93-97. Note that the average low for this valuation over the same period was about 3. The current price to book, 6.7, is as high now as it has been in any year since 1991 except for a period during 1997. Assuming that business models are similar to the periods that gave us those numbers, they at least give some insight into what investors like you, me, and Fidelity have been willing to pay for the best semi company in the world. Is this scary? I dont know. Depends on your tolerance for risk, if you even see risk here. My point is this: If there is a corelation between price and earnings, then either the earnings is going to increase or the ratio will have to expand for the price to rise. I dont see a lot of estimates rising. As for PSR, the same goes for sales, and I dont see total revenue rising like it has recently. I am certainly very heavily long in Intel at this point, but I am not sure that the stock qualifies now like it has in the past if I use some of my own measures to evaluate it as an investment likely to appreciate significantly in the forseeable future. Good point with the Willie Mays thing, but the problem is that Intel has been to bat for many years and over the last 5 or 6, all those at bats, and all those recent home runs were only accorded a PE of, at best, about where we are now. As far as the ratio, there seems only room below. Let's hope that earnings later this year can spare us the need for prayers about ratio expansion. Regards, J