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  • emanuel_dabah emanuel_dabah Oct 22, 2004 6:59 AM Flag

    Bloomberg just said it all:


    The investor should examine the P/E (194.32) relative to the growth rate (30.33%), based on the analyst consensus projected future long term growth rate, for a company. This is a quick way of determining the fairness of the price. In this particular case, the P/E/G ratio for GOOG (6.41) is very unattractive. This criteria is the most important one in the methodology and a failure of it will automatically result in a 0% score for the overall analysis.


    For companies with sales greater than $1 billion, this methodology likes to see that the P/E ratio remain below 40. Large companies can have a difficult time maintaining a growth rate high enough to support a P/E above this threshold. GOOG, whose sales are $2,257.9 million, needs to have a P/E below 40 to pass this criterion. GOOG's P/E of (194.32) is not considered acceptable.


    When inventories increases faster than sales, it is a red flag. Unfortunately we do not have sufficient data for GOOG to evaluate this criterion.

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