About a month ago I posted Serious Money: AAPL, EBAY, GE, GOOG, MSFT, TWX, WMT, YHOO -- one more look, covering the original Great Eight stocks we focused on at BloggingStocks. These were based on reader interest, which they do still generate today.
Apple Inc. (NASDAQ: AAPL) was the big winner among only four that had appreciated. The following indicates commonly used metrics for tracking and comparing stocks.
Reviewing the stocks in order of lowest to highest P/E ratio (TTM):
- Time Warner (NYSE: TWX) 14.84
- General Electric (NYSE: GE) 14.91
- Microsoft (NASDAQ: MSFT) 17.08
- Wal-Mart (NYSE: WMT) 18.29
- Yahoo Inc. (NASDAQ: YHOO) 34.25
- Apple Inc. (NASDAQ: AAPL) 37.82
- Google Inc. (NASDAQ: GOOG) 40.28
- eBay (NASDAQ: EBAY) 95.24
It is interesting to note that only two of the eight have a below market P/E ratio, while only two are average. On the other hand, four are double the average and beyond, which leads me to believe the overall market consensus is that it is still very early in the game for these stocks and their futures are yet to be determined. The P/E ratios of the four are also the most volatile as are the stock prices.
Reviewing the stocks in order of lowest to highest P/S ratio (TTM):
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Time Warner (NYSE: TWX) 1.24
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General Electric (NYSE: GE) 1.88
- Microsoft (NASDAQ: MSFT) 4.70
- eBay (NASDAQ: EBAY) 4.91
- Yahoo Inc. (NASDAQ: YHOO) 5.14
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Apple Inc. (NASDAQ: AAPL) 5.68
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Google Inc. (NASDAQ: GOOG) 10.08
Reviewing the stocks in order of lowest to highest Return on Equity (TTM):
- Apple Inc. (NASDAQ: AAPL) 28.69%
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Google Inc. (NASDAQ: GOOG) 21.11%
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General Electric (NYSE: GE) 19.03%
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Yahoo Inc. (NASDAQ: YHOO) 10.96%
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Time Warner (NYSE: TWX) 6.12%
The RoE is a common measure of company management effectiveness. If this is your guide and you are a Yahoo shareholder, then you might have a strong desire to see Microsoft's unsuccessful bid for Yahoo be accepted. Even if you did not get the full value based on CEO Jerry Yang's vision (or ego), you might see far greater growth under the new management.
Reviewing the stocks in order of lowest to highest Return on Assets (TTM):
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Google Inc. (NASDAQ: GOOG) 14.21%
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Apple Inc. (NASDAQ: AAPL) 14.09%
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eBay (NASDAQ: EBAY) 9.02%General Electric (NYSE: GE) 2.01%
- Wal-Mart (NYSE: WMT) 8.80%
- Time Warner (NYSE: TWX) 4.14%
Yahoo Inc. (NASDAQ: YHOO) 3.44%
The RoA makes Yahoo's management seem even more inept, earning only a fraction of Microsoft's shareholder value. My pal Warren would frown on Yahoo's poor showing in these categories. Providing shareholder value is chief among his pursuits, and since he is the largest shareholder of Berkshire Hathaway (NYSE: BRK.A), he continues to benefit the most from this goal.
It is impossible to predict the future with any great reliability or consistency, but if one were to look for a secure investment for the future with demonstrated success and the potential of being a part of growing industries, then only Microsoft appears to fit the bill. It is the only company among the eight that is fairly priced and increases shareholder value in a big way based on these metrics.
Two other criteria I look at but did not review here are dividends and cash-flow. In that regard, Microsoft would also prove rewarding.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of BRK.B, EBAY, and TWX.
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Reader Comments (Page 1 of 1)
5-13-2008 @ 9:51PM
XamaX said...
What you just said about Yahoo! is like stating that it would be a great business deal for investors if a company would just pick the desert's sand and sell it for gold - I have to ask: what good, however, would that bring to the world?
Oh I'm sorry, you couldn't care less, it's all about money for you.
Everybody knows that while money makes the world go round - it's pure energy - it is not the soul of a company.
Yahoo! being bought by MSFT would be a great deal for their investors if they're in it just for the money. In which case they should just bail out. I hope they did and they do. Oddly, Yahoo!'s stock didn't plunge at all...
If Yahoo! were to be bought by MSFT, its shares would rise to MSFT price range and the company would perform better in whatever metrics you described *because it would have become MSFT* and wouldn't be Yahoo! anymore.
Yahoo! would then have become Boohoo!
It would then be a soulless company.
Notwithstanding your seemingly brilliant metrics logic, I beg to differ: the reason for MSFT's dropping Yahoo!'s bid was that, aside from sheer incompetence from MSFT's management, they realised an awfully big number of Yahoo!'s Software Engineers would simply go out the door and leave the company for dead. I just bet many customers would too. I mean, what stops them to deal with MSFT today is MSFT also has search engines?!
The problem with you "investment company" people is that you have become blind to anything that is not money, you have lost your vision. You think money is the fulcrum when it is a consequence.
Saying that MSFT buying Yahoo! would be a great deal only speaks about how much you don't get about the business you're talking about, how much you're not clued up about the Software Business and software programmers.
You may be totally clued up in Metrics, however.