Tuesday 14 May 2013

Market capitalization

An American technology design company
A German software and service company

A German machine and turbine producer

Today while working a little with my personalized DAX index I discovered that Siemens is no longer the biggest company on DAX.
The biggest right now is SAP with 77.8 billion euro. Siemens are second with 72 billion euro and Volkswagen are third with 71 billion followed very closely by BASF and Bayer slightly below 70 billion.

What I find disturbing with this is that SAP had 2012 a revenue of 16.2 billion and profit of 2.8 billion. While Siemens had a revenue of over 78 billion and a profit of 4.6 billion euro. Volkswagen had a revenue of over 192 billion euro with a profit of 21.7 billion euro in 2012.

Is the market capitalization of SAP justified? I think not and with the P/E5 of over 31 for SAP I would be very careful concerning owning that company today. But like everyone is saying... a company can stay at the top for a long, long time but it can also do like Apple even when it has a proper P/E valuation by the market which is not the case for SAP.

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