Price to Operating Profit (P/OP)
since 2005
Calculation
EMC Corp., P/OP, long-term trends, calculation
| P/OP | = | Share price1, 2, 3 | ÷ | Operating profit per share1 | Operating profit per share1 | = | Operating income (loss)1 (in millions) |
÷ | No. shares of common stock outstanding2 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Feb 25, 2016 | 17.77 | = | 25.93 | ÷ | 1.46 | 1.46 | = | 2,841 | ÷ | 1,947,047,380 | |
| Feb 27, 2015 | 14.25 | = | 28.94 | ÷ | 2.03 | 2.03 | = | 4,037 | ÷ | 1,988,086,911 | |
| Feb 25, 2014 | 12.53 | = | 25.68 | ÷ | 2.05 | 2.05 | = | 4,150 | ÷ | 2,025,633,308 | |
| Feb 27, 2013 | 12.36 | = | 23.28 | ÷ | 1.88 | 1.88 | = | 3,964 | ÷ | 2,104,430,304 | |
| Feb 24, 2012 | 16.41 | = | 27.52 | ÷ | 1.68 | 1.68 | = | 3,442 | ÷ | 2,053,084,362 | |
| Feb 28, 2011 | 20.98 | = | 27.21 | ÷ | 1.30 | 1.30 | = | 2,683 | ÷ | 2,068,593,886 | |
| Feb 26, 2010 | 25.39 | = | 17.49 | ÷ | 0.69 | 0.69 | = | 1,414 | ÷ | 2,052,724,194 | |
| Mar 2, 2009 | 13.00 | = | 10.14 | ÷ | 0.78 | 0.78 | = | 1,569 | ÷ | 2,011,875,734 | |
| Feb 29, 2008 | 18.77 | = | 15.54 | ÷ | 0.83 | 0.83 | = | 1,739 | ÷ | 2,100,569,673 | |
| Feb 27, 2007 | 24.00 | = | 13.75 | ÷ | 0.57 | 0.57 | = | 1,208 | ÷ | 2,108,120,587 | |
| Mar 6, 2006 | 22.70 | = | 14.14 | ÷ | 0.62 | 0.62 | = | 1,480 | ÷ | 2,376,750,510 |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).
1 US$
2 Data adjusted for splits and stock dividends.
3 Closing price as at the filing date of EMC Corp. Annual Report.
The Price to Operating Profit (P/OP) ratio for the period between 2006 and 2016 exhibits significant volatility, characterized by several distinct phases of valuation expansion and contraction. While operating profit per share demonstrated a general long-term upward trajectory until 2015, the market valuation expressed through the P/OP ratio did not always move in tandem with these operational gains.
- Valuation Volatility and Peaks
- The P/OP ratio reached its highest point in February 2010 at 25.39, marking a sharp recovery from a low of 13.00 in March 2009. This period represents the most significant short-term fluctuation in valuation, where the share price rose from 10.14 to 17.49 while operating profit per share remained relatively stagnant, moving from 0.78 to 0.69.
- Operational Growth vs. Valuation Compression
- A notable trend of valuation compression occurred between February 2011 and February 2014. During this window, operating profit per share grew consistently from 1.30 to 2.05. Despite this strong operational performance, the P/OP ratio declined steadily from 20.98 to 12.53. This suggests that operational earnings grew at a significantly faster rate than the market's willingness to pay for those earnings, resulting in a lower valuation multiple.
- Recent Performance Trends
- In the final two years of the analyzed period, a reversal in the trend is observed. Between February 2015 and February 2016, operating profit per share declined from 2.03 to 1.46. Conversely, the P/OP ratio increased from 14.25 to 17.77. This indicates a valuation expansion occurring simultaneously with a contraction in operating profitability.
- Long-term Share Price and Profit Correlation
- Over the eleven-year span, the share price increased from 14.14 in 2006 to 25.93 in 2016, while operating profit per share rose from 0.62 to 1.46. The P/OP ratio ended the period at 17.77, which is lower than the initial 2006 valuation of 22.70, suggesting that the company's overall operational growth has outpaced its share price appreciation over the long term.
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Comparison to Competitors
EMC Corp., P/OP, long-term trends, comparison to competitors
| EMC Corp. | Advanced Micro Devices Inc. | Analog Devices Inc. | Applied Materials Inc. | Broadcom Inc. | Intel Corp. | Lam Research Corp. | Marvell Technology Inc. | Micron Technology Inc. | NVIDIA Corp. | Qualcomm Inc. | Texas Instruments Inc. | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Feb 25, 2016 | 17.77 | — | 22.69 | 12.92 | 23.80 | 9.66 | 14.45 | 18.85 | 6.04 | 16.52 | 15.68 | 12.34 |
| Feb 27, 2015 | 14.25 | — | 23.01 | 19.66 | 59.05 | 10.60 | 16.98 | 27.46 | 11.23 | 19.66 | 17.00 | 15.64 |
| Feb 25, 2014 | 12.53 | 26.08 | 20.62 | 46.30 | 23.31 | 10.02 | 64.12 | 18.01 | 74.52 | 12.16 | 16.30 | 17.02 |
| Feb 27, 2013 | 12.36 | — | 14.67 | 31.47 | 13.51 | 7.13 | 26.84 | 15.14 | — | 14.06 | 17.43 | 19.14 |
| Feb 24, 2012 | 16.41 | 14.16 | 9.26 | 6.04 | 12.05 | 7.62 | 5.54 | 11.35 | 7.18 | 40.70 | 17.45 | 12.75 |
| Feb 28, 2011 | 20.98 | 7.42 | 11.93 | 12.82 | 13.69 | 7.79 | 10.92 | 39.12 | 4.84 | — | 22.51 | 9.25 |
| Feb 26, 2010 | 25.39 | 8.03 | 30.48 | — | 81.90 | 20.19 | — | 35.44 | — | — | 32.90 | 15.16 |
| Mar 2, 2009 | 13.00 | — | 7.90 | 10.25 | — | 7.50 | 9.41 | — | — | 13.27 | 14.67 | 8.01 |
| Feb 29, 2008 | 18.77 | — | 16.49 | 10.36 | — | 14.36 | 6.12 | 10,050.76 | — | 22.39 | 22.57 | 11.81 |
| Feb 27, 2007 | 24.00 | — | 20.89 | 12.54 | — | 21.27 | 14.39 | 46.71 | 30.18 | 24.63 | 22.34 | 13.27 |
| Mar 6, 2006 | 22.70 | 84.32 | 26.80 | 21.07 | — | 9.99 | 10.23 | 59.44 | 39.55 | 37.70 | 27.83 | 17.12 |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).