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Upcoming changes, though, mean a country could support a higher multiple than is safe today, he adds.
After 18 months of talks, Walgreens is paying a lower earnings multiple than KKR and co did.
The stock is also priced at a lower multiple than China Telecom, because it has businesses other than cellular".
But there are also some utility companies that pay absolutely no dividends, instead offering investors a growth stock story at a lower multiple than your basic dot-com.
That was a higher multiple than it enjoyed through the first half of the 1990's, hardly a time of investor pessimism regarding the company.
Disney, in fact, has a lower multiple than the media conglomerate AOL Time Warner, whose shares are trading at 43 times operating income.
On last year's revenues, a $20bn market cap would value the company at 23 times last year's sales – a higher multiple than the recent big-money technology flotations.
Four or five months ago, those companies traded for 20 to 30 times per-share earnings, a considerably higher multiple than investors paid for regulated utilities that distribute power to homes and businesses, Mr. Patterson said.
The final price is also less than one-third of the company's annual revenue of $662 million, a significantly smaller multiple than European luxury fashion houses like Fendi were receiving last year.
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But then, media companies typically trade at higher multiples than many other types of businesses, on the theory that they will grow faster.
The other two — Precision Castparts and Foster Wheeler — have been trading at higher multiples than some investors would like, but, Mr. Pearlman says, are worth the price.
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