Now that we’re heading into another Great Depression, I thought we’d check in on the valuation metrics for America’s favorite group of stocks: FAANG (FB, AMZN, AAPL, NFLX, GOOGL)
Year to date this basket of stocks is down 18%, with NFLX leading the charge lower -39%. The average loss from their 52 week highs is -24.5%. The total market cap of these 5 stocks are $6.7 trillion, down ~$1.5 trillion or so from the highs — capital destruction largess.
Average revenue TTM growth is +33% and earnings TTM growth stands at an impressive +70%.
The avg price to sales ratio is 6.1x, with the 3yr avg standing at 7.2x. If share prices did nothing for a year, based on current estimates, the future price to sales ratio would be 5.1x — putting this basket, based on its 3yr median multiple, at a 44% discount to proposed price targets.
But what if this year isn’t like the past 3? Let’s compare them to say 2015 multiples, a year that sucked balls during peak Obama “EAT YOUR PEAS” era.
Stock/ 2015 PS
Average 2015 PS was 6.9x, but to be fair FB was still a hyper growth play then. If we X’d out FB — the current PS is 5.75x and 2015’s PS was 4.3x. The FPS for this basket ex’d out FB is 4.9x. In other words, in spite of the calamitous drop — these fucking stocks can barrel another 25% to get down to 2015 price to sales levels. In order for that grim forecast to come to fruition the economy would need to materially change for the worse. If the economy is fine and this is just a stock correction, this basket has +44% upside based on current bull market multiples.
Data provided by Stocklabs.If you enjoy the content at iBankCoin, please follow us on Twitter