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Technology Stocks : S3 (Multimedia semi's place 2be)
SIII 0.00010000.0%May 12 5:00 PM EST
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To: Bob Huff who wrote (7313)1/22/1997 11:59:00 AM
From: C.Carlos   of 9477
 
<When you are talking revenue growth, earnings growth whatever, comparing the EPS with stocks that have different number of outstanding shares isn't valid.>

Bob, I must be missing something. What does the number of shares outstanding of a company has to do with determining the price of the stock on PE basis? The number of shares outstanding is significant in determining EPS. Once you have the EPS figure, the number of shares has already been considered. Once you have the EPS and you want to determine the PE of the specific stock, the number of outstanding shares is not relevant. Assuming for ilustration purposes that using a PE of 20 and TRID would have made .38 Iin each quarter and SIII .29, TRID would be priced at $30.40 (.38x4x20=30.40) while SIII would be priced at $23.20 (.29x4x20=23.20).

Regarding the percentage of growth in your example, you are using year to year numbers. I believe that what analysts are using in their projection is a formula were future growth prospects predominate based on a quarter to quarter basis. Using the projections in your example, SIII made .29 in 96Q4 and is projected to make .30 in 97QI, that's a quarter to quarter increase of 3.4%. On the other hand TRID will go from .38 in 96Q4 to .42 in 97Q1, for a 10.5 increase. This is a quarter to quarter increase projection, which is the type of projections analysts are using.

C. Carlos
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