Why do tech companies have high pe

According to William J. In other words, by Graham's standards, these supposedly solid and mature stocks were overvalued. In theory, stocks trading at high multiples will eventually revert to the industry norm — and vice-versa — for those issues sporting lower earnings-based valuations. On the other hand, the reverse has held during other periods, which then supports Ben Graham's investment process. Source: Robert Schiller, " Irrational Exuberance ".

Or that, in today's technology-driven economy, the ratios have become passe? Not necessarily. Many cite the pop of the tech bubble in the early s as a prime example of the sticky mess investors can find themselves in when they don't take heed of earnings and price. William J. Robert J. Peter Lynch, John Rothchild. Simon and Schuster, Financial Ratios.

Stock Markets. Fundamental Analysis. Your Privacy Rights. To change or withdraw your consent choices for Investopedia. And this has put downward pressure on US interest rates, which futures markets expect will remain low for the foreseeable future. Golub agrees. So while his analysis of the historical returns from companies with high PE ratios suggests we should be worried — at the current level of The US corporate bond yield of 3. Skip to navigation Skip to content Skip to footer Help using this website - Accessibility statement.

Chanticleer Print article. Lewis: I wanted to bring you on the show because I know you focus on tech, and I think that this space is particularly prime for this type of investing approach.

You have a couple of reasons for that. Erickson: Sure. Erickson: It's companies that are investing more in themselves. The first reason for that is really kind of cloud-based computing. Companies are spending very heavily on servers and a lot of IT infrastructure for hosting things in the cloud.

More and more software is moving this way. When you spend a lot of money upfront on those servers and infrastructure, you have to depreciate that over time. Statista Accounts: Access All Statistics. Basic Account. The ideal entry-level account for individual users. Corporate solution including all features. Statistics on " Oracle " The most important statistics. The most important statistics. Further related statistics. Price-to-earnings ratio of global public software companies , by region 5-year revenue growth and average profit margin of software companies worldwide EBIT and EBITDA margin of major software companies worldwide Median revenue and expenses at listed software companies worldwide Current ratio of major software companies worldwide Top software vendors in North America Software companies with the highest annual revenues in Software vendors ranked by total software revenue Revenues of the leading global software companies in Italy Software companies ranked by revenue from SaaS worldwide Market share of ERP software companies in Germany Companies by security software revenue worldwide Market share of CRM software developers in Germany Annual revenue growth of software professional services worldwide Top software vendors in the EMEA region Further Content: You might find this interesting as well.

Statistics Price-to-earnings ratio of global public software companies , by region 5-year revenue growth and average profit margin of software companies worldwide EBIT and EBITDA margin of major software companies worldwide Median revenue and expenses at listed software companies worldwide Current ratio of major software companies worldwide Top software vendors in North America Software companies with the highest annual revenues in Software vendors ranked by total software revenue Revenues of the leading global software companies in Italy Software companies ranked by revenue from SaaS worldwide Market share of ERP software companies in Germany Companies by security software revenue worldwide Market share of CRM software developers in Germany Annual revenue growth of software professional services worldwide Top software vendors in the EMEA region Topics Adobe Inc.

Learn more about how Statista can support your business. July 27, Price-to-earnings ratio of leading software companies worldwide in [Graph]. In Statista. Accessed November 12, Price-to-earnings ratio of leading software companies worldwide in