大型科技公司的股票走勢,會影響大盤。
這是多年來的一個核心主題,并且在最近科技股暴跌和小幅回彈之后也被熱烈討論。在美國勞動節周末之前,納斯達克指數的10只估值最高的股票均短暫創下歷史新高。但不久之后,這些股票在9月15日收盤時下跌7.2%,市值較最高點蒸發了7,000億美元。雖然絕大多數股票,包括股價低迷的金融股和航空股,在同一時期都表現出良好的韌性,但它們的數量和實力都不足以抵消科技業巨頭的股票下跌對大盤的拖累。權力掌握在大型科技公司手中。
真實的情況是主力科技股定價嚴重過高,早該經歷一次大幅下滑,還是科技股只是一時受挫?關于這個問題的辯論因為大盤科技股的暴跌自然變得更加激烈。事實上,大盤科技股自9月初下跌之后已經反彈,這意味著蘋果(Apple)和特斯拉(Tesla)這些大盤股將開啟新一輪的上漲行情。由于這些大名鼎鼎的公司基本上能夠決定市場的方向,因此我們可以通過研究這些大盤股以往的走勢,預測它們的未來行情。
五年前,大盤科技股或許并不便宜,但價格適中
我們在此次分析中研究了納斯達克100指數中市值最高的10家科技公司。實際上,這10家公司共有11只股票,因為納斯達克單獨統計Alphabet的A類和B類股票。我們將這些公司視為一家單獨的公司,將其命名為“StarTech”,然后研究過去五年股價、利潤、股息和回購的變化,以及這些變化會對它們的未來走勢形成哪些障礙。
為了更好地對比StarTech當前的表現和歷史表現,我研究了從2015年至2019年每年9月30日的指標,以及截至今年9月15日的數據。這些基準數據基于每年7月初至次年6月底的表現,因為在9月末還沒有可用的9月所在季度的業績。《財富》雜志的統計學專家斯科特·戴卡洛為我提供了納斯達克前十大科技股(即我們的StarTech)名單,包括它們在這些日期的市值和收益。我們選擇的名稱StarTech讓我想起了一部備受觀眾喜愛的電視劇《星際迷航》(Star Trek)。我們能夠明顯看出,無論是StarTech還是《星際迷航》,多年來主演幾乎沒有變化,但配角卻變化顯著。
在2015年第三季度末,按照市值從高到低,StarTech中包含了蘋果、Alphabet、微軟(Microsoft)、Facebook、亞馬遜(Amazon)、吉利德科學(Gilead Sciences)、英特爾(Intel)、思科(Cisco)、安進(Amgen)和新基制藥(Celgene)。當時,未來成員特斯拉和英偉達(Nvidia)還沒有進入大盤股的陣營,它們在納斯達克100指數中分別排在第35位和第78位。當時,StarTech的總市值達到驚人的2.688萬億美元。我們將這個數字作為StarTech的“股票價格”。StarTech的多只成分股都是讓人興奮尖叫的股票,蘋果的市盈率倍數為13,微軟為17,吉利德為10,英特爾為13。在隨后四個季度(7月至次年6月),StarTech的一般公認會計準則(新基制藥)凈收益總計達到1,410億美元,因此市盈率倍數為19.1。真是讓人懷念。
在截至2015年6月的四個季度,StarTech由蘋果和微軟牽頭共支付股息274億美元。因此其股息收益率為1.5%。它在股份回購上的支出幾乎是股息的三倍,高達718億美元,這似乎預示著即將有事情發生。這意味著,StarTech將總收益的70%,即992億美元返還給了投資者。由于StarTech的市盈率倍數低于20,相對適中,因此StarTech僅通過發放股息和股份回購,就實現了3.7%的回報率(992億美元除以其“價格”2.688萬億美元)。股息加回購的收益率為未來的獲利奠定了堅實的基礎,但在那之后,這個基礎卻開始崩塌。除了3.7%的回報以外,投資者可能希望可以從收益增長中獲得額外的好處,或許能夠提高市盈率,因為當時的基準市盈率為19倍,似乎意味著StarTech的市盈率仍然有提高的空間。我們會看到,正是市盈率的瘋狂上漲,才讓StarTech陷入當前的境地。
未來四年,配角更替,而StarTech的定價越來越高
三年后的2018年9月30日,除了英偉達和奈飛(Netflix)取代吉利德和新基制藥以外,StarTech內的其他公司沒有變化。當時,其“價格”或總市值已經暴漲123%,達到6萬億美元。兩家收入豐厚的大型生物科技公司被有超高市盈率的新公司取代,幫助大幅提高了StarTech的價格。雖然收益增長36%,達到1,940億美元,但其價格更大幅度的上漲,使市盈率上漲了三分之二,達到31倍。
令人意外的是,在隨后的一年,StarTech失去了動力。不到一年前,截至2019年9月底,StarTech的估值小幅下降至5.948萬億美元,但收益增長18%,達到2,280億美元。突然之間,StarTech的定價似乎變得更加合理,盡管它的價格依舊很高。出現這種情況有兩個原因。第一,蘋果憑借規模龐大但增長緩慢的利潤奠定了基礎,而谷歌和Facebook的收益齊頭并進,持續增長。市盈率相對較低的創收大戶英特爾、思科和德州儀器(TI)依舊是該組合的一部分,它們貢獻了與估值不成比例的大量收益。然而,這次短暫的停頓只是一次股價爆炸式上漲的前奏,這次上漲是自2000年互聯網泡沫破滅以來前所未見的。
去年,StarTech開始一路攀升
在短短11個月內,StarTech進入了一個會被中世紀的測繪員標記為“這里有龍”的區域。9月15日,其市值達到9.42萬億美元,較2019年9月增長了3.47萬億美元,漲幅高達58%。相比之下,收益卻減少8%,降至2,090億美元。這是因為微軟和Alphabet的利潤減少,蘋果的利潤幾乎沒有增長,特斯拉首日進入該陣營,英特爾、思科和德州儀器被英偉達、PayPal和奈飛取代,雖然大幅增加了市值,但增加的利潤卻微不足道。
結果是StarTech的市盈率從26倍升至45倍。在2015年的市盈率只有19倍。現在投資者為每一美元收益支付的成本比2015年增加了130%。
基本數學運算顯示,從此以后,StarTech無法再給你帶來回報
自2015年以來,StarTech的整體利潤實際上表現非常出色,從1,450億美元增長到2,090億美元,漲幅高達44%,年比增長7.8%。StarTech的上漲空間被壓縮,并且面臨下跌的威脅,造成這種情況的原因是肆意上漲的股價,其上漲速度是利潤的三倍。
今天,從StarTech分配而不是再投資的收益占比中可以看出,StarTech的管理比2015年變得更加保守。這與擁躉們心目中的大型科技公司的形象截然相反。他們將其想象成一臺無與倫比的增長機器。從2019年年中至2020年年中,StarTech共發放股息300億美元,占利潤的14%。StarTech還投入巨資進行股份回購,在12個月內支出了約1,380億美元,所以,它總計將80%的利潤返還給了股東,而2015年這一比例為70%。五年前,每10美元收益中,會有3美元被重新投入到發展業務,但到2020年,這個數字已經減少到2美元。
雖然StarTech分配了更多現金,但它通過回購和發放股息給股東帶來的回報卻大幅減少,原因很簡單:其股價上漲了兩倍以上。StarTech的股息收益率從1.0%下降到0.32%,股份回購收益率從2.7%下降到1.5%,總收益率下降了一半,從3.7%降至1.8%。
擁躉們一直能夠從大型科技公司獲得兩位數的收益,他們也期望未來仍然可以有如此豐厚的回報,因此股息和回購帶來的1.8%的收益率顯得暗淡無光。擁躉們含蓄地說,這些家喻戶曉的公司將20%的收益用于發展業務,能夠產生巨額回報。但他們實際上是在承認,這些公司另外80%的收益沒有有利可圖的投資方向,這讓人感到沮喪。
讓我們樂觀地預測,未來五年,StarTech的總利潤將以每年6%的速度增長。這一數字遠低于2015年以來的7.8%。但請注意,StarTech再投資的利潤占比比2015年低了10個百分點。此外,StarTech將繼續由已經成熟(蘋果、微軟)或者正在快速成長(Alphabet)的中堅力量主導。收益增長6%意味著StarTech投入到新工廠、晶圓廠和收購的資金,回報率必須達到20%以上。
要實現這個目標,到2025年年中,StarTech的利潤必須從2,090億美元增加到2,790億美元。如果這個目標實現,投資者將獲得豐厚的回報,年度總回報率高達7.8%,其中利潤增長6%,股息和回購的回報率為1.8%。但這些數據中包含一個非常樂觀的假設:StarTech的市盈率倍數維持在當前高居不下的45倍。9月2日的下跌使其市盈率下降到高峰時期的50倍以下。
45倍市盈率比2015年至2019年的平均基準市盈率25.8上漲了75%。所以,慎重的投資者應該考慮,如果StarTech的市盈率倍數下降到30倍會發生什么。30倍仍然比五年基準市盈率高出16%。在這種情況下,StarTech的市值將從今天的9.42萬億美元下降到8.37萬億美元,降幅為11%。但經過回購之后流通股數量將減少約12%,這會讓投資者受益,然而需要特別注意的是,新加入該陣營的特斯拉和奈飛正在增發股票,用于發展特許經營業務。所以,市值下降11%,意味著投資者的年度資本收益為1%。原因是雖然整體市值下降11%,但每股單價依舊會上漲1%(因為流通股減少了12%)。加上0.32%的股息收益率,總收益率接近1.5%。
這可算不上大型科技公司的擁躉們所渴望的豐厚回報。1.5%的回報率趕不上通貨膨脹的上漲速度。如果市盈率倍數回落到25倍左右的平均水平,潛在收益率會變成零甚至負數。
當然,有一種情景能夠拯救StarTech,這或許也是狂熱粉絲們所期待的情景。他們對特斯拉、英偉達、奈飛、Adobe和PayPal等新進入該陣營的公司以及亞馬遜寄予厚望,這五家公司的市盈率高達114倍。在股票市場的歷史上很少有公司能夠背負如此高的期望。StarTech要回饋投資者,只有豐厚的回報還不夠,它還要做到精益求精。這就是問題所在。StarTech的偉大不在于它的業績,而是人們對它的期望。(財富中文網)
譯文:劉進龍
審校:汪皓
大型科技公司的股票走勢,會影響大盤。
這是多年來的一個核心主題,并且在最近科技股暴跌和小幅回彈之后也被熱烈討論。在美國勞動節周末之前,納斯達克指數的10只估值最高的股票均短暫創下歷史新高。但不久之后,這些股票在9月15日收盤時下跌7.2%,市值較最高點蒸發了7,000億美元。雖然絕大多數股票,包括股價低迷的金融股和航空股,在同一時期都表現出良好的韌性,但它們的數量和實力都不足以抵消科技業巨頭的股票下跌對大盤的拖累。權力掌握在大型科技公司手中。
真實的情況是主力科技股定價嚴重過高,早該經歷一次大幅下滑,還是科技股只是一時受挫?關于這個問題的辯論因為大盤科技股的暴跌自然變得更加激烈。事實上,大盤科技股自9月初下跌之后已經反彈,這意味著蘋果(Apple)和特斯拉(Tesla)這些大盤股將開啟新一輪的上漲行情。由于這些大名鼎鼎的公司基本上能夠決定市場的方向,因此我們可以通過研究這些大盤股以往的走勢,預測它們的未來行情。
五年前,大盤科技股或許并不便宜,但價格適中
我們在此次分析中研究了納斯達克100指數中市值最高的10家科技公司。實際上,這10家公司共有11只股票,因為納斯達克單獨統計Alphabet的A類和B類股票。我們將這些公司視為一家單獨的公司,將其命名為“StarTech”,然后研究過去五年股價、利潤、股息和回購的變化,以及這些變化會對它們的未來走勢形成哪些障礙。
為了更好地對比StarTech當前的表現和歷史表現,我研究了從2015年至2019年每年9月30日的指標,以及截至今年9月15日的數據。這些基準數據基于每年7月初至次年6月底的表現,因為在9月末還沒有可用的9月所在季度的業績。《財富》雜志的統計學專家斯科特·戴卡洛為我提供了納斯達克前十大科技股(即我們的StarTech)名單,包括它們在這些日期的市值和收益。我們選擇的名稱StarTech讓我想起了一部備受觀眾喜愛的電視劇《星際迷航》(Star Trek)。我們能夠明顯看出,無論是StarTech還是《星際迷航》,多年來主演幾乎沒有變化,但配角卻變化顯著。
在2015年第三季度末,按照市值從高到低,StarTech中包含了蘋果、Alphabet、微軟(Microsoft)、Facebook、亞馬遜(Amazon)、吉利德科學(Gilead Sciences)、英特爾(Intel)、思科(Cisco)、安進(Amgen)和新基制藥(Celgene)。當時,未來成員特斯拉和英偉達(Nvidia)還沒有進入大盤股的陣營,它們在納斯達克100指數中分別排在第35位和第78位。當時,StarTech的總市值達到驚人的2.688萬億美元。我們將這個數字作為StarTech的“股票價格”。StarTech的多只成分股都是讓人興奮尖叫的股票,蘋果的市盈率倍數為13,微軟為17,吉利德為10,英特爾為13。在隨后四個季度(7月至次年6月),StarTech的一般公認會計準則(新基制藥)凈收益總計達到1,410億美元,因此市盈率倍數為19.1。真是讓人懷念。
在截至2015年6月的四個季度,StarTech由蘋果和微軟牽頭共支付股息274億美元。因此其股息收益率為1.5%。它在股份回購上的支出幾乎是股息的三倍,高達718億美元,這似乎預示著即將有事情發生。這意味著,StarTech將總收益的70%,即992億美元返還給了投資者。由于StarTech的市盈率倍數低于20,相對適中,因此StarTech僅通過發放股息和股份回購,就實現了3.7%的回報率(992億美元除以其“價格”2.688萬億美元)。股息加回購的收益率為未來的獲利奠定了堅實的基礎,但在那之后,這個基礎卻開始崩塌。除了3.7%的回報以外,投資者可能希望可以從收益增長中獲得額外的好處,或許能夠提高市盈率,因為當時的基準市盈率為19倍,似乎意味著StarTech的市盈率仍然有提高的空間。我們會看到,正是市盈率的瘋狂上漲,才讓StarTech陷入當前的境地。
未來四年,配角更替,而StarTech的定價越來越高
三年后的2018年9月30日,除了英偉達和奈飛(Netflix)取代吉利德和新基制藥以外,StarTech內的其他公司沒有變化。當時,其“價格”或總市值已經暴漲123%,達到6萬億美元。兩家收入豐厚的大型生物科技公司被有超高市盈率的新公司取代,幫助大幅提高了StarTech的價格。雖然收益增長36%,達到1,940億美元,但其價格更大幅度的上漲,使市盈率上漲了三分之二,達到31倍。
令人意外的是,在隨后的一年,StarTech失去了動力。不到一年前,截至2019年9月底,StarTech的估值小幅下降至5.948萬億美元,但收益增長18%,達到2,280億美元。突然之間,StarTech的定價似乎變得更加合理,盡管它的價格依舊很高。出現這種情況有兩個原因。第一,蘋果憑借規模龐大但增長緩慢的利潤奠定了基礎,而谷歌和Facebook的收益齊頭并進,持續增長。市盈率相對較低的創收大戶英特爾、思科和德州儀器(TI)依舊是該組合的一部分,它們貢獻了與估值不成比例的大量收益。然而,這次短暫的停頓只是一次股價爆炸式上漲的前奏,這次上漲是自2000年互聯網泡沫破滅以來前所未見的。
去年,StarTech開始一路攀升
在短短11個月內,StarTech進入了一個會被中世紀的測繪員標記為“這里有龍”的區域。9月15日,其市值達到9.42萬億美元,較2019年9月增長了3.47萬億美元,漲幅高達58%。相比之下,收益卻減少8%,降至2,090億美元。這是因為微軟和Alphabet的利潤減少,蘋果的利潤幾乎沒有增長,特斯拉首日進入該陣營,英特爾、思科和德州儀器被英偉達、PayPal和奈飛取代,雖然大幅增加了市值,但增加的利潤卻微不足道。
結果是StarTech的市盈率從26倍升至45倍。在2015年的市盈率只有19倍。現在投資者為每一美元收益支付的成本比2015年增加了130%。
基本數學運算顯示,從此以后,StarTech無法再給你帶來回報
自2015年以來,StarTech的整體利潤實際上表現非常出色,從1,450億美元增長到2,090億美元,漲幅高達44%,年比增長7.8%。StarTech的上漲空間被壓縮,并且面臨下跌的威脅,造成這種情況的原因是肆意上漲的股價,其上漲速度是利潤的三倍。
今天,從StarTech分配而不是再投資的收益占比中可以看出,StarTech的管理比2015年變得更加保守。這與擁躉們心目中的大型科技公司的形象截然相反。他們將其想象成一臺無與倫比的增長機器。從2019年年中至2020年年中,StarTech共發放股息300億美元,占利潤的14%。StarTech還投入巨資進行股份回購,在12個月內支出了約1,380億美元,所以,它總計將80%的利潤返還給了股東,而2015年這一比例為70%。五年前,每10美元收益中,會有3美元被重新投入到發展業務,但到2020年,這個數字已經減少到2美元。
雖然StarTech分配了更多現金,但它通過回購和發放股息給股東帶來的回報卻大幅減少,原因很簡單:其股價上漲了兩倍以上。StarTech的股息收益率從1.0%下降到0.32%,股份回購收益率從2.7%下降到1.5%,總收益率下降了一半,從3.7%降至1.8%。
擁躉們一直能夠從大型科技公司獲得兩位數的收益,他們也期望未來仍然可以有如此豐厚的回報,因此股息和回購帶來的1.8%的收益率顯得暗淡無光。擁躉們含蓄地說,這些家喻戶曉的公司將20%的收益用于發展業務,能夠產生巨額回報。但他們實際上是在承認,這些公司另外80%的收益沒有有利可圖的投資方向,這讓人感到沮喪。
讓我們樂觀地預測,未來五年,StarTech的總利潤將以每年6%的速度增長。這一數字遠低于2015年以來的7.8%。但請注意,StarTech再投資的利潤占比比2015年低了10個百分點。此外,StarTech將繼續由已經成熟(蘋果、微軟)或者正在快速成長(Alphabet)的中堅力量主導。收益增長6%意味著StarTech投入到新工廠、晶圓廠和收購的資金,回報率必須達到20%以上。
要實現這個目標,到2025年年中,StarTech的利潤必須從2,090億美元增加到2,790億美元。如果這個目標實現,投資者將獲得豐厚的回報,年度總回報率高達7.8%,其中利潤增長6%,股息和回購的回報率為1.8%。但這些數據中包含一個非常樂觀的假設:StarTech的市盈率倍數維持在當前高居不下的45倍。9月2日的下跌使其市盈率下降到高峰時期的50倍以下。
45倍市盈率比2015年至2019年的平均基準市盈率25.8上漲了75%。所以,慎重的投資者應該考慮,如果StarTech的市盈率倍數下降到30倍會發生什么。30倍仍然比五年基準市盈率高出16%。在這種情況下,StarTech的市值將從今天的9.42萬億美元下降到8.37萬億美元,降幅為11%。但經過回購之后流通股數量將減少約12%,這會讓投資者受益,然而需要特別注意的是,新加入該陣營的特斯拉和奈飛正在增發股票,用于發展特許經營業務。所以,市值下降11%,意味著投資者的年度資本收益為1%。原因是雖然整體市值下降11%,但每股單價依舊會上漲1%(因為流通股減少了12%)。加上0.32%的股息收益率,總收益率接近1.5%。
這可算不上大型科技公司的擁躉們所渴望的豐厚回報。1.5%的回報率趕不上通貨膨脹的上漲速度。如果市盈率倍數回落到25倍左右的平均水平,潛在收益率會變成零甚至負數。
當然,有一種情景能夠拯救StarTech,這或許也是狂熱粉絲們所期待的情景。他們對特斯拉、英偉達、奈飛、Adobe和PayPal等新進入該陣營的公司以及亞馬遜寄予厚望,這五家公司的市盈率高達114倍。在股票市場的歷史上很少有公司能夠背負如此高的期望。StarTech要回饋投資者,只有豐厚的回報還不夠,它還要做到精益求精。這就是問題所在。StarTech的偉大不在于它的業績,而是人們對它的期望。(財富中文網)
譯文:劉進龍
審校:汪皓
As Big Tech goes, so goes the market.
That's been the dominant theme for years, and that's the story of the recent selloff and mini-bounceback that followed. After the brief span just before Labor Day weekend, when all of the ten most valuable members of the Nasdaq hit all-time highs, the group dropped 7.2% by the close on September 15 close, shedding $700 billion in market cap from their peak. Though the vast majority of stocks––including beaten down financials and airlines––proved resilient over that period, their numbers and strength weren't nearly sufficient to offset the drag from the falling tech titans. It's Big Tech that wields the power.
Naturally, Big Tech's retrenchment has heightened the debate over whether its leaders are vastly overpriced and long overdue for a steep slide, or simply suffering a temporary stumble. Indeed, the group has rebounded since the initial drop in early September, showing that the Apples and Teslas may once again be on the march. Given that its marquee names pretty much set the market's direction, let's examine what Big Tech's past trajectory tells us about where where the group is headed.
Five years ago, Big Tech if not cheap, looked modestly priced
For this analysis, we'll study the ten highest-market-cap tech companies in the Nasdaq 100. That's actually 11 stocks, since the Nasdaq counts both Alphabet's A and B shares separately. We'll treat the entire group as a single company I'll label "StarTech," and see how its price, profits, dividends and buybacks have changed over the past five years, and what those changes mean for handicapping StarTech's future.
To best compare today's StarTech to its past versions, I look at its metrics on September 30 each year from 2015 to 2019, and those numbers as of September 15 of this year. These benchmark's are based on performance from the start July to the end of June, since results for the September quarters were not yet available at the end of that month. Fortune's statistical wizard Scott DeCarlo provided me with lists of the Nasdaq's tech Top Ten (our StarTech), including their market caps and earnings, on those dates. Our chosen name StarTech recalls a beloved sci-fi TV series, and it's remarkable that the top cast in both StarTech and Star Trek remained pretty much the same over the years, though for StarTech, the supporting players changed substantially.
At the end of Q3, 2015, StarTech encompassed, from high to low as measured by market cap, Apple, Alphabet, Microsoft, Facebook, Amazon, GileadSciences, Intel, Cisco, Amgen and Celgene. At the time, future members Tesla and Nvidia didn't come close to making the cut, ranking 35th and 78th respectively on the Nasdaq 100. StarTech's total market valuation then was an almost quaint $2.688 trillion. We'll treat that number as its "share price." Several of its components looked like screaming buys, with Apple featuring a price-to-earnings multiple of 13, and Microsoft at 17, Gilead at 10, and Intel at 13. All told, StarTech amassed $141 billion in GAAP net earnings over the trailing four quarters (July to June), and hence harbored a P/E of 19.1. Talk about retro.
Over the past four quarters ended in June 2015, StarTech paid out $27.4 billion in dividends led by Apple and Microsoft. That put its dividend yield at 1.5%. In a sign of things to come, it lavished almost three times that much, another $71.8 billion, on share repurchases. So StarTech was returning $99.2 billion, or 70% of total earnings, to investors. Because its P/E was a relatively modest sub-20, StarTech delivered a return of 3.7% in dividends and buybacks alone ($99.2 billion divided by its "price" of $2.688 trillion). That dividend-plus-repurchases yield provided a solid foundation for future gains, a foundation that's crumbled since. On top of that 3.7%, investors could expect extra juice from gains in earnings, and a perhaps a rising P/E, since its then-benchmark of 19 appeared to leave room for expansion. As we'll see, it was the moonshot in the P/E that put StarTech in its current box.
Over the next four years, the supporting cast changed, and StarTech got pricier
Three years later, on September 30, 2018, StarTech encompassed exactly the same businesses save two: Nvidia and Netflix replaced Gilead and Celgene. By then, its "price," or total market cap, had jumped 123% to $6.0 trillion. Having two big biotech earners supplanted by newcomers with giant P/Es helped render StarTech a lot more expensive. Although earnings rose 36% to $194 billion, the much bigger jump in its price raised the P/E by two-thirds, to 31.
Surprisingly, over the following year StarTech's momentum stalled. By the end of September, 2019, less than a year ago, its valuation stood a tad lower at $5.948 trillion, while earnings rose 18% to $228 billion. All of a sudden, StarTech was looking, if not like a bargain, somewhat more reasonably priced. The reason is two-fold. First, Apple was supplying a base of huge, though slowly growing profits, and Google and Facebook provided earnings that were both increasingly big, and racing ahead. Plus, Intel, Cisco and TI, big profit-makers with relatively low P/Es, were still part of the mix, contributing lots of earnings relative to their valuations. The pause, however, was just the prelude to an explosion in prices not witnessed since the bubble of 2000.
It's just in the past year that StarTech's went stratospheric
In just over 11 months, StarTech's has entered territory that medieval cartographers labeled, "Here Lie Dragons." On September 15, its market hit $9.42 trillion, a $3.47 or 58% increase over September of 2019. By contrast, earnings dropped 8% to $209 billion. That's because profits for Microsoft and Alphabet declined, Apple's barely grew, and the addition of Tesla for the first time, and replacement of Intel, Cisco and TI (by Nvidia, PayPal and Netflix) added huge market caps but puny profits.
The upshot: StarTech's P/E surged from 26 to 45. Investors are now paying 130% more for each dollar of earning than in 2015, when it's multiple was just 19.
Basic math says that StarTech won't make you money from here
StarTech's overall profits actually performed performed pretty well since 2015, rising from $145 billion to $209 billion, or 44%, a pace of 7.8% a year. What's capping the upside, and threatening a drop, is the rampaging price that's waxed three times as fast as profits.
Today, StarTech's being managed a lot more conservatively than in 2015, as shown by the share of earnings it's distributing instead of re-investing. That contradicts its fans portrayal of Big Tech as a matchless growth machine. From mid-2019 to mid-2020, StarTech paid $30 billion in dividends, amounting to 14% of profits. The big money went to buybacks; StarTech spent an estimated $138 billion in repurchases over those twelve months, so all told, it returned 80% of total profits to shareholders, versus 70% in 2015. While it plowed back $3 of every $10 in earnings to grow the business five years ago, that number shrank to $2 by 2020.
Even though it's distributing a lot more cash, StarTech is offering a far lower juice from buybacks and dividends for a simple reason: Its price has more than tripled. Its dividend yield has fallen from 1.0% to .32%, while the kick from repurchases has dwindled from 2.7% to 1.5%, halving the total yield provided by both from 3.7% to 1.8%.
A 1.8% return from dividends and buyback pales beside the kind of double-digit gains that fans have been garnering from Big Tech, and that they expect in the future. By implication, the believers are saying that these vaunted names will generate enormous returns on the 20% of earnings they're keeping to grow the business. It's not encouraging that they're essentially admitting they have no profitable places to invest the other 80% of their earnings.
Let's make the optimistic forecast that total StarTech's total profits will rise at 6% a year over the next half-decade. That's well below the 7.8% since 2015. But keep in mind that it's reinvesting a share of its profits that's ten-points lower. In addition, the group will continue to be dominated by stalwarts that are either mature (Apple, Microsoft), or getting there fast (Alphabet). And achieving 6% earnings growth means that StarTech will need to generate 20%-plus returns on the dollars it channels into new plants, fabs, and acquisitions.
Getting there means StarTech must raise profits from $209 billion to $279 billion by mid-2025. If that happens, investors would pocket a decent annual total return of 7.8%, 6% from increasing profits and 1.8% from dividends and buybacks. But those numbers incorporate a hugely positive assumption: That StarTech's P/E remains at its current, highly elevated level of 45. The selloff brought that number down from 50 at the peak on September 2.
A multiple of 45 is seventy-five percent higher than the 2015 to 2019 average benchmark of 25.8. So prudent investors should ask what would happen if StarTech's P/E fell to 30, which is still 16% above the five-year norm. In that case, its market cap would fall from today's $9.42 trillion to $8.37 trillion, or 11%. But investors would benefit from a shrinkage in shares outstanding courtesy of all the buybacks, which would cut the count by around 12%, although it's important to note that newcomers Tesla and Netflix are floating more shares to expand their franchises. So the 11% drop in the valuation would leave investors with a 1% annual capital gain. The reason: Though the total market cap would be 11% lower, the price per share (because there's 12% fewer of them), would still be 1% higher. Add the .32% dividend yield, and the total return would be just under 1.5%.
Those aren't the sumptuous gains big tech partisans are counting on. A 1.5% return loses to inflation. If the P/E drops back to its mid-20s average, those potential returns would to go zero or turn negative.
Of course, one scenario could bail out StarTech, and maybe it's the one the zealots are counting on. They're placing gigantic expectations on newcomers Tesla, Nvidia, Netflix, Adobe, and PayPal, not to mention Amazon, a gang of five that's selling at 114 times earnings. Few groups in stock market history have been accorded such great expectations. For StarTech to pay off, they'll have to deliver not just big, but bigger than big. That's the problem. What's great about StarTech isn't its performance. It's the expectations.