Amazon and Alphabet Both Cost More on Next Year's Earnings Than on Last Year's
When a stock costs more on next year's earnings than on last year's, profits are usually about to fall. What it means here is stranger.
Overview
On the surface, the numbers look backwards. Amazon (NASDAQ: AMZN) trades at about 22 times earnings and about 30 times the earnings expected of it over the next year. Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) trades at about 18 times earnings and about 27 times forward.
For both, next year costs more than last year. Ordinarily, that arithmetic means one thing -- profits are expected to fall.
Details
And these aren't struggling businesses. So either the market expects earnings to decline at two of the largest companies on Earth, or the trailing numbers aren't what they appear.
Source
Originally published at www.fool.com.
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