Shares of LinkedIn (LNKD) are about to breakout to all-time highs. A breakout is usually a positive sign — a signal the stock’s about to burst higher. But when I look at the numbers, I’m sceptical this stock can go much higher.
One Year Chart
This one year chart looks very good. Well, except that big-ole 200 P/E. Whew. These Web 2.0 stocks can get pricey. Even the P/E on 2013 earnings is high — 95.
Profit growth is solid, but LNKD didn’t beat the street last quarter (it met). Plus, 2012 estimates fell from $0.68 to $0.61. A 200 P/E stock should be throttling estimates higher. LNKD isn’t — it didn’t even beat.
Fair Value
I feel this stock continues to be worth 60 times earnings. And I’m being generous.
Sharek’s Take
LNKD is really overvalued. The biggest negative besides the 200 P/E is estimates. NxtQtrEst fell 4 cents and 2QtrsOut fell 5 cents (you can see this in the Earnings Table). I’m not afraid of high P/E stocks. Not at all. I do want them to act like the premier stocks they are being priced at.
Don’t chace this stock. Buy it around $80 or don’t buy it at all.
View the Earnings Table here.View the Ten-Year Chart here.
