ASML Holdings ASML - Reversal Pattern & Downtrend
ASML -
$38 BILLION market cap - $7.22 Billion in Sales - 19% margins. This is a rich valuation at 5.5 times sales, especially when revenues are very stable and margins are declining. Looked at another way, if you keep $1.4 billion each year on an investment of $38 billion, then it is a very low return of less than 4%. The market value has grown dramatically without much happening to revenues and without help from rising margins. Over time, this is a problem.
The latest earnings report was announced on Jan 21 and the stock jumped initially but has since faded and it appears that investors are seeing the writing on the wall that the stock is richly valued and they are selling. The sell-zone is marked in red and the earnings release date is marked in a red triangle.
There is an accelerating, parabolic trend line that broke back in October and since then a reversal pattern has built in the form of the well-recognized "head & shoulders" pattern.
Price and time projections indicate $74 to $68 targets on the downside. Risk to sell short is roughly $6/sh.
Tim 11:56AM EST, Tuesday, Feb 25, 2014
$38 BILLION market cap - $7.22 Billion in Sales - 19% margins. This is a rich valuation at 5.5 times sales, especially when revenues are very stable and margins are declining. Looked at another way, if you keep $1.4 billion each year on an investment of $38 billion, then it is a very low return of less than 4%. The market value has grown dramatically without much happening to revenues and without help from rising margins. Over time, this is a problem.
The latest earnings report was announced on Jan 21 and the stock jumped initially but has since faded and it appears that investors are seeing the writing on the wall that the stock is richly valued and they are selling. The sell-zone is marked in red and the earnings release date is marked in a red triangle.
There is an accelerating, parabolic trend line that broke back in October and since then a reversal pattern has built in the form of the well-recognized "head & shoulders" pattern.
Price and time projections indicate $74 to $68 targets on the downside. Risk to sell short is roughly $6/sh.
Tim 11:56AM EST, Tuesday, Feb 25, 2014
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