The Soapbox

BocaHoo91

Joined: 06/03/2005 Posts: 31007
Likes: 52333


I guess I'm thinking of valuations for large caps. You have a company like


like MCD which is up nearly 50% for the year and trades at a forward P/E of 25 times earnings. That's a crazy valuation for a company of that size ($140 billion market cap) with flat-ish (to down) revenue growth.

McDonald's will benefit from tax cuts, but, I'd expect a company like MCD to support a mid- to high- teens P/E and you don't get anywhere near that even with the earnings benefit from tax reform

That's just one example... KO is trading at a similar valuation. PG is trading at 20 times earnings. WMT at 20+ times earnings. Even in a low interest rate environment and with an earnings bump from tax reform, those all feel like really rich valuations for very large companies with questionable growth prospects.

That said, I am long, it's just harder to find companies where I'm not concerned about valuation.


(In response to this post by Stimp)

Posted: 12/14/2017 at 10:05AM



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