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Comment by krigath

Apple's P/E ratio is 13.12 [1]. Facebook's P/E ratio is 107.66 [2].

The P/E ratio[3] is: market price per share / annual earnings per share

This basically means that Apple makes as much profit as their are valued at in 13.12 years, whereas it would take Facebook 107.66 years to afford to buy themselves.

That doesn't make any sense, and if we assume that their P/E ratio should be roughly the same, their stock price should be around [4] 33.54/(107.66/13.12) = 4.09 USD

Edit: Google's P/E ratio is 18.32, and if Facebook were to have the same P/E ratio its stock price would have to be 5.71 USD [5].

[1] http://www.google.com/finance?q=AAPL

[2] http://www.google.com/finance?q=NASDAQ:FB

[3] http://en.wikipedia.org/wiki/PE_ratio

[4] https://www.google.co.uk/search?q=33.54%2F(107.66%2F13.12)

[5] https://www.google.co.uk/search?q=33.54%2F(107.66%2F18.32)

parent krigath 14 years ago

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