“The reason we look at valuation is that it offers insight into how innovation is perceived,” Horace Dediu and Dirk Schmidt write for Asymco. ” If a company is a successful innovator it usually creates vast wealth for its owners. However, the timing of that wealth creation depends greatly on its recognition by others.”
“So with that in mind we like to compare industry and innovation analysis with what ‘the market’ thinks about Apple,” Dediu and Schmidt write. “The latest method we had in mind was to compare P/E (a measure of valuation) and Growth. We’ve shown before that they seem to be moving in different directions. That’s not been news for over a year. What we will try to do now is to see if there is discernible change in the relationship before and after the financial crisis.”
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Dediu and Schmidt write, “In the case of Apple, average growth actually increased slightly between the two sampling periods (from 68% to 71%) while the average P/E dropped from 32.8 to 17.5.”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Dan K.” for the heads up.]