Why is Yahoo Going for $30

Can anyone tell my why Yahoo (YHOO) is going for $30 a share?
Seriously, I just don’t get it. I’m always looking at stocks and asking myself if the price “makes sense.” Usually they do, sometimes they don’t. But Yahoo? Sheesh…it’s not even in the ballpark.
Here’s a quick look as some valuations:

Stock Price 08 Estimate Multiple
Yahoo $29.89 $0.73 40.9
Cognizant $94.88 $2.76 34.4
Google $470.01 $18.42 25.5
Apple $86.15 $3.78 22.8
eBay $33.37 $1.51 22.1
EMC $13.60 $0.78 17.4
SanDisk $41.66 $2.54 16.4
Intel $21.51 $1.34 16.1
GE $36.10 $2.49 14.5
Amgen $70.00 $4.95 14.1

A look at the P/E ratio based on next year’s earnings is far from a perfect valuation measure, but it gives you an idea of just how pricey Yahoo is. I don’t see how Yahoo can be that much higher than Google and Apple.
Make no mistake: Yahoo had a very good earnings report last quarter. The company topped expectations by six cents a share (19 to 13). But still, Yahoo’s revenues grew by 13%. Is that enough to justify this valuation?

Posted by on February 8th, 2007 at 10:21 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.