No. of Recommendations: 24
In hindsight, the reason is not inexplicable.
Profit margins have steadily increased and doubled since the turn of the century. As a result of this trend and in anticipation of this trend continuing, market participants have been willing to steadily expand P/E multiples as well.
Sorry, but that doesn't explain it. If profit margins increased, then the E in the P/E increased. That justifies an increase in P, but not an expansion of the P/E ratio. It could explain an expansion of P/S (price to sales) but not of P/E (price to earnings).
Elan
