Savvy Trades and Investments

[dmmm]

re backing out SBC, I have 1 problem with that method. If you back out SBC, it is not enough to factor in current dilution. If you apply a multiple to current earnings ex-SBC to get a value for the company, you must factor in future dilution as well (notice this runs into the same problem of estimation as expensing does). This will mean a lower PE ratio than you would apply to an identical company that paid its employees in cash. Either way will give you the same valuation, but in my opinion it is simpler to expense.

Hope this makes sense.