[ergo98]

Goldman Sachs has a P/E ratio of 5.94.

Microsoft's P/E is heavily "discounted" because it's considered a sort of swan song of easy money (the Windows and Office empire that they've coasted on). Apple's is considered the beginning of things. Stock value today isn't based on today, it's based on "tomorrow".

[zmitri]

Just so you know, Goldman Sachs' P/E has nothing to do with this discussion. GS is a player in an entirely different industry and it is useless to compare this one statistic between two tech companies.

[ergo98]

>Goldman Sachs' P/E has nothing to do with this discussion

Nothing? Don't you think that's a little strong?

P/E reflects growth prospects, and a large, established financial company has limited growth prospects. Just as a large, established, coasting tech company tends to have lower P/E ratios. GS lives in an industry with lower P/E ratios, but saying that it has "nothing" to do with it is terribly wrong.

[zmitri]

I am in the midst of studying for a hefty financial certification exam right, so your comment reminded of something that is frowned upon in the financial industry.

Its not that what you're saying is completely wrong, just unnecessary.

A P/E ratio is useful, but it requires lots of context. You provided no context and mentioned a stock that shows little to no correlation to the tech industry and plus the financial industry is somewhat "messy" right now.

I suggest you look up some other large established banks and their P/E ratios right now. For example, Morgan Stanley (MS) has a P/E of 98. Does that mean they have that much more growth potential? Maybe it means that GS is currently undervalued with all the negative press they are getting recently? A low P/E could also be a sign of being undervalued, just as a high P/E can a sign of being overvalued. On the other hand, the tech industry is proving to be quite lucrative lately. Apple has released the iPad and is coming up on their WWDC and there is plenty of speculation concerning iPhone 4G and mobile advertising opportunities. With all the media attention Apple gets, their "friendly" design, and their phenomenal advertising campaigns, isn't it quite possible that they are overvalued? As soon as a viable Windows 7 based tablet comes out that lets you torrent, play divx via divxplayer and flash, don't you think the iPad might be a little more than fucked in its current incarnation/closed environment? And who knows, maybe Microsoft is undervalued right now seeing as two execs have left? Its at a fairly low share price (historically speaking) right now.

tl;dr Fundamental analysis is complicated enough as it is, don't throw in unrelated numbers.

[krschultz]

You are missing the point, GS is a horrible example to compare to anything but other financials right now. We have upheaval in the financial market around the world along with new regulations coming down a year after they were basically bankrupt and had to be bailed out by the government. What about that is established, limited growth prospects etc.

There are plenty of other large cap companies to compare MS to that are far more applicable, look at Proctor and Gamble's P/E is 16.06. Colgate Palmolive's is 19, IBM's is 12. Those are more comparable/normal.

[ergo98]

>You are missing the point

So you're going to provide another poster's "point"? Their point was that they were two different industries, which is entirely fair. Your point is something entirely different altogether, yet you're speaking on their behalf.

P/E is often a farcical metric, yet you know I'm not the one who brought P/E into the discussion, yet here we are.

[papachito]

> Apple's is considered the beginning of things.

Who says that? They could be at the top of their game right now and not see more growth and stabilizing and/or decreasing in the future. There is no way to tell, otherwise you'd be very rich already ;)

> Stock value today isn't based on today, it's based on "tomorrow".

Who says that? Many believe that Apple stocks are overvalued today, that's for sure. Oh, and again, there is no way to tell the future.

[orangecat]

. There is no way to tell, otherwise you'd be very rich already ;)

Conversely, the aggregate opinion of investors does has some value. Otherwise you could make a fortune betting against any stocks with high P/E ratios.

Many believe that Apple stocks are overvalued today, that's for sure.

Sure. And just as many believe it's undervalued, otherwise the current price would be lower than it is. This is true for any stock.

[mcav]

> "They could be at the top of their game right now and not see more growth and stabilizing and/or decreasing in the future."

In the future, anything's possible. But the future is almost always a function of the past, and current trends indicate anything but a decline in Apple's growth.

[borism]

Trends reverse, and "this thing is going up forever" trends usually reverse with a huge drops and without a warning.

Check this http://www.davemanuel.com/investor-dictionary/momentum-play-...

[avar]

Stock price isn't meant to predict the future, it represent trust in the future turning out well for investors.