I don’t have a strong sense on the valuation of Twitter Inc (NYSE:TWTR), but I want to share with you forty companies with valuations similar to that of Twitter Inc (NYSE:TWTR) as of the close on November 7th.
Company | Ticker | Industry | Market cap | P/B | P/S | PE ttm | P/EE1 | P/EE2 | EE growth | yield |
Adobe Systems Incorporated | ADBE | 1036 – Software & Programming | 27,529.77 | 4.03 | 6.61 | 62.10 | 34.50 | 24.50 | 11.67 | – |
Alexion Pharmaceuticals, Inc. | ALXN | 0809 – Major Drugs | 24,136.47 | 10.25 | 16.88 | 69.70 | 36.00 | 29.00 | 24.58 | – |
Allergan, Inc. | AGN | 0803 – Biotechnology & Drugs | 26,830.29 | 4.41 | 4.41 | 21.40 | 16.70 | 15.50 | 13.14 | 0.20 |
Allstate Corporation, The | ALL | 0715 – Insurance (Property & Casualty) | 24,567.41 | 1.22 | 0.72 | 13.80 | 10.30 | 9.50 | 9.34 | 1.90 |
Archer Daniels Midland Company | ADM | 0515 – Food Processing | 27,157.60 | 1.39 | 0.30 | 18.30 | 12.60 | 12.50 | 10.00 | 1.90 |
Baker Hughes Incorporated | BHI | 0612 – Oil Well Services & Equipment | 25,880.76 | 1.44 | 1.18 | 24.10 | 13.80 | 11.10 | 18.75 | 1.00 |
BB&T Corporation | BBT | 0727 – Regional Banks | 23,863.10 | 1.23 | 3.58 | 15.80 | 11.20 | 10.20 | 5.98 | 2.70 |
Carnival Corporation | CCL | 0936 – Recreational Activities | 27,001.00 | 1.11 | 1.76 | 24.50 | 21.90 | 15.80 | 12.25 | 2.90 |
Charles Schwab Corp | SCHW | 0718 – Investment Services | 29,963.52 | 3.39 | 5.75 | 33.00 | 25.70 | 21.00 | 18.95 | 1.00 |
CME Group Inc | CME | 0718 – Investment Services | 24,825.87 | 1.14 | 8.62 | 26.70 | 20.40 | 18.10 | 13.17 | 2.40 |
Cognizant Technology Solutions | CTSH | 1036 – Software & Programming | 26,408.19 | 4.96 | 3.29 | 23.30 | 18.70 | 15.90 | 18.30 | – |
Corning Incorporated | GLW | 1024 – Electronic Instruments & Controls | 24,907.02 | 1.15 | 3.11 | 13.80 | 12.20 | 10.90 | 17.60 | 2.30 |
Crown Castle International Cor | CCI | 0939 – Rental & Leasing | 21,830.17 | 7.32 | 7.53 | 234.90 | 92.00 | 56.70 | 38.77 | – |
CSX Corporation | CSX | 1112 – Railroads | 26,726.76 | 2.71 | 2.24 | 14.10 | 13.40 | 12.00 | 11.43 | 2.30 |
Cummins Inc. | CMI | 0218 – Misc. Capital Goods | 23,966.10 | 3.38 | 1.41 | 17.10 | 13.80 | 11.50 | 10.00 | 1.90 |
Devon Energy Corp | DVN | 0609 – Oil & Gas Operations | 25,591.32 | 1.28 | 2.69 | (14.80) | 11.50 | 11.00 | 8.40 | 1.40 |
Discover Financial Services | DFS | 0703 – Consumer Financial Services | 25,064.00 | 2.36 | 3.33 | 10.20 | 10.30 | 9.80 | 8.14 | 1.50 |
Estee Lauder Companies Inc | EL | 0521 – Personal & Household Products | 27,129.73 | 8.26 | 2.66 | 27.10 | 21.50 | 19.10 | 12.97 | 1.10 |
Exelon Corporation | EXC | 1203 – Electric Utilities | 24,541.52 | 1.15 | 0.98 | 21.20 | 12.70 | 12.80 | (5.23) | 4.30 |
Hess Corp. | HES | 0609 – Oil & Gas Operations | 27,839.92 | 1.16 | 1.01 | 7.90 | 14.00 | 14.10 | 5.80 | 1.20 |
LinkedIn Corp | LNKD | 1018 – Computer Services | 25,055.41 | 9.90 | 18.09 | 733.00 | 100.00 | 66.00 | 54.06 | – |
Marathon Oil Corporation | MRO | 0606 – Oil & Gas – Integrated | 25,041.70 | 1.32 | 1.53 | 15.90 | 11.20 | 12.70 | 10.00 | 2.20 |
Marsh & McLennan Companies, In | MMC | 0712 – Insurance (Miscellaneous) | 25,307.43 | 3.73 | 2.10 | 19.70 | 16.90 | 15.10 | 11.42 | 2.20 |
Noble Energy, Inc. | NBL | 0609 – Oil & Gas Operations | 26,993.21 | 3.04 | 6.05 | 26.30 | 17.80 | 16.70 | 15.90 | 0.70 |
Norfolk Southern Corp. | NSC | 1112 – Railroads | 27,004.80 | 2.62 | 2.44 | 15.30 | 13.70 | 12.20 | 12.55 | 2.40 |
Northrop Grumman Corporation | NOC | 0203 – Aerospace and Defense | 24,672.98 | 2.64 | 0.99 | 12.90 | 13.00 | 11.90 | 2.83 | 2.30 |
Pioneer Natural Resources | PXD | 0606 – Oil & Gas – Integrated | 28,235.38 | 3.78 | 8.22 | 241.50 | 34.60 | 28.50 | 16.48 | – |
PPG Industries, Inc. | PPG | 0103 – Chemical Manufacturing | 26,169.80 | 5.19 | 1.74 | 26.80 | 19.30 | 17.10 | 9.25 | 1.30 |
Public Storage | PSA | 0933 – Real Estate Operations | 29,002.91 | 5.61 | 15.37 | 37.80 | 33.10 | 30.90 | 6.93 | 3.30 |
Raytheon Company | RTN | 0203 – Aerospace and Defense | 27,009.38 | 3.06 | 1.11 | 14.20 | 13.50 | 12.00 | 8.70 | 2.60 |
Regeneron Pharmaceuticals Inc | REGN | 0803 – Biotechnology & Drugs | 27,921.68 | 18.70 | 16.05 | 38.20 | 51.50 | 35.90 | 29.70 | – |
Reynolds American, Inc. | RAI | 0524 – Tobacco | 28,065.60 | 5.53 | 3.39 | 18.10 | 14.90 | 13.70 | 7.70 | 4.90 |
Southern Copper Corp | SCCO | 0124 – Metal Mining | 23,964.20 | 4.61 | 3.84 | 14.80 | 14.30 | 12.70 | 11.50 | 2.40 |
Spectra Energy Corp. | SE | 1206 – Natural Gas Utilities | 23,682.60 | 2.71 | 4.53 | 25.30 | 21.30 | 20.70 | 5.45 | 3.40 |
Sprint Corp | S | 0915 – Communications Services | 26,981.29 | 1.02 | 1.02 |
(6.25) |
(16.96) |
(94.11) |
(32.11) |
– |
Stryker Corporation | SYK | 0812 – Medical Equipment & Supplies | 28,005.55 | 3.20 | 3.15 | 31.80 | 16.00 | 14.70 | 8.16 | 1.40 |
VF Corp | VFC | 0403 – Apparel/Accessories | 23,606.95 | 4.19 | 2.11 | 20.50 | 17.50 | 15.40 | 11.14 | 1.90 |
WellPoint, Inc. | WLP | 0706 – Insurance (Accident & Health) | 25,386.06 | 1.02 | 0.37 | 9.30 | 10.20 | 9.50 | 8.21 | 1.80 |
Whole Foods Market, Inc. | WFM | 0957 – Retail (Grocery) | 23,509.62 | 6.21 | 1.83 | 43.70 | 36.60 | 30.30 | 18.71 | 0.60 |
Williams Companies, Inc. | WMB | 0609 – Oil & Gas Operations | 24,256.36 | 5.17 | 3.37 | 38.20 | 29.20 | 23.40 | 10.80 | 4.10 |
Grand Average | 25,890.84 | 2.29 | 1.76 | 25.03 | 17.98 | 15.79 | 12.17 | 1.68 |
Twitter’s valuation was around $25.9 Billion at the close of regular trading on 11/7. The private equity sponsors must be jumping for joy, as they got more than they expected on the IPO, and even more, if the price of Twitter Inc (NYSE:TWTR) holds up past the time of their lockup, when they can sell their remaining shares.
Twitter has no profits, and trades at 10 times book value, versus 2.3x on their competitors here. Price-to-Sales is around 50, versus 1.8 for competitors here.
There is one thing certain here, there is a lot of profits growth expected out of Twitter. It has to go from negative profits to positive, and then soar thereafter. That would justify the valuation.
But how likely is that? There are few companies that ever do that. So be wary and avoid Twitter Inc (NYSE:TWTR) stock, realizing there is a small chance that it might be worth its present valuation, much less more.
Full disclosure: no position in Twitter Inc (NYSE:TWTR) or any companies mentioned here.
By David Merkel, CFA of Aleph Blog