No. of Recommendations: 19
If you go back further as I did with my analysis of CRM you will notice that we never had EV/TTM Sales above 17.6

And it was a bargain the whole time! It's up like 14x in the last decade. Are you saying that it was overvalued at a PS of 18?

I think you are anchoring to the recent highs. These high EV/TTM Sales ratios have only been around for a relatively brief period.

I'm not anchoring to anything. Here's my thinking: A PS of 10 correlates to a PE of ~33 for a company with a 30% net margin. A PS of 20 correlates to a PE 66. That seems like a pretty reasonable range for companies that are growing at 50% or 60%...and downright cheap for companies that are growing at 90%.

If you are to say that, "Well, they're not spouting off 30% net margins (or FCF margins) yet, yes I agree completely. But we don't want them to! We want them investing back in their businesses and sales teams, and continuing to grow as rapidly as possible.

What am I missing?

Bear
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.