>Where'd you learn to value stocks, the Motley Fool? ;)
I hear those Fools don't do so badly.
>But you ought to use DCF when everybody else does.
Why?
I thought the whole point was to beat the crowd, not join it.
>Try valuing Coke with
>PEG... it don't work too good.
That says more about Coke than the usefulness of the valuation technique.
>Also, market caps are irrelevant...
I just plain disagree. Normally, the bigger the market cap, the harder it is to maintain high growth rates that justify a high price earnings multiple. It's ususally easier to have 100% revenue growth in a company with $10 million in revenues than in a company with $10 billion in revenues because it is usually easier to come up with $10 million than $10 billion.
Actually, I'm surprised you did not raise the one argument that could make market caps less relevant, the possibility of using excess cash for a stock buyback, which Microsoft is already doing to some extent.
'Course, when they're throwing away $400 million on MSNBC and who knows how much on IE, I guess that doesn't leave much money for stock buybacks.;)
>In the case of Microsoft, NT 4/5 should open up a
>high-margin revenue spigot for a couple years.
That's what everyone is counting on. Of course, they said the same thing about Windows 95 and it didn't pan out. What if the same thing happened with NT?
> 40% revenue growth next year is
>completely within the realm of possibility. Earnings growth? Who knows.
Please show me how they plan to come up with 40 percent revenue growth next year. And don't just say "Oh, they'll do this and that," leaving us to guess how much "this and that" will generate in revenues. Show me with facts and figures how you project the target will be achieved.
And then do it all over again for the year after, and the year after that, etc., etc.
And, even after you do all that, you are still left with a fair valuation of $144. |
