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Technology Stocks : America On-Line (AOL)
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To: Pruguy who wrote (3959)1/29/1999 1:41:00 PM
From: Chuzzlewit  Read Replies (3) of 41369
 
Pruguy, just consider that AOL has a market cap that is about 15% higher than DIS, and has 9% of the earnings of DIS. It looks to me that the stock is behaving as if the company will generate at least 6 BB in earnings in five years or so. To do that it would need to increase its earnings at around 105% pa compounded for the next 5 years.

Now, applying DIS's multiple (40x on a trailing basis) to those presumed earnings 5 years out we would get a market cap of $117 BB. And that would allow only 7.9% annual appreciation of the stock price. In other words, it seems to me that the market has already assumed that the company will generate more than three times DIS's ttm earnings in five years.

Does this seem reasonable to you?

TTFN,
CTC
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