Yes, I remain deaf, dumb, and blind. I am not impressed with the Amazon.com (NASDAQ: AMZN) earnings report. I am sure the amazonian shareholders will confirm my ignorance. What is all the excitement about? So what if it almost quadrupled it's earnings. That is not hard to do when you barely have any. Nineteen cents a share -- oh my gosh!
So now if they can keep it up and earn perhaps $1.00 in the next 12 months Amazon only has a forward P/E of 100. Are you kidding me,100? Are we to believe that a dollar invested in Amazon is worth 3 times what Google is worth? I don't think this makes any sense at all. There must be a few folks out there that are equally unimpressed. After Google Inc. (NASDAQ: GOOG) and Apple Inc. (NASDAQ: AAPL) reported earnings both stocks shot up. Amazon on the other hand is off over 10% in after market trading.
Maybe I'll feel different in the morning after further thought or the enlightened commentary of one of our readers. In the mean time I'm left thinking, is this all there is?
To find potential opportunities and verify my track record, read Chasing Value or Serious Money.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.
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Reader Comments (Page 1 of 1)
10-24-2007 @ 10:34AM
Amit said...
PE by itself is not particularly informative. You need to look at growth as well. If the earnings grew 400%, then the PEG is 100/400 -> 0.25 (assuming a $1 EPS, per your example).
A PEG of 0.25 would be quite amazing. What is Google's PEG?
10-24-2007 @ 12:08PM
Sheldon said...
Amit,
Your are right the P/E is not the most important element in a stocks value. But it does have some relevance and AMZN is totally out of wack. If you want to discuss PEG ratios; AAPL is 1.46 and GOOG is 1.31 while AMZN is 1.98 TOO HIGH ALSO! Furthermore your 400% growth is a joke. They grew 400% off of no earnings (5 cents). AMZN comparables for Q4 might even be lower than last years Q4. Only penny stocks and new companies can grow at 400% not ten year old companies. Other readers should take note of Amit's comments. They are scary and if that's the reasoning that "investors" are using in speculating in AMZN than it is more support for my belief that it is way over priced!