Hi Andre,
I laughed when I saw CNBC answered your question, I guess the little guy can be heard after all!
Unfortunately, St. Denis didn't exactly foreshadow stunning growth when he answered $1B in 4 years, or 35% a year.
That's not bad in itself, however it will come at the expense of EPS growth. Fiddler implied as much by giving St. Dennis a free reign to grow the top line.
These are my projections going forward.
FY1999 EPS = .61
WIND will definitely grow EPS at a significantly slower rate than in prior years. I am using 20% EPS growth in my calculations.
Hence, in 4 years EPS = 1.26
The wildcard is the price to earnings ratio investors will assign to WIND.
I'm using a PE of 75, down from the current PE of 107. That gives me a stock price of $94.50 in 4 years time. Still not a bad return, however who really knows how investors will value a company growing revenues at 35% and EPS at 20%, maybe it will be less, maybe it will be more....
Those yahoos at Yahoo who think WIND will be $150 by the end of the year should give their head a shake, they are counting on a PE of 250. A tad wild given 35% revenue growth don't you think.
Wind's problem is that they actually make a profit. If their EPS was negative, their PE ratio would be non-existent ala Amazon, Yahoo et al. Then the stock price would be left to investors imagination. In that scenario, the hype surrounding the embedded market would probably have made WIND a $10B market cap company by now.
I hope I am proven wrong by those who are willing to pay $250 for $1 in earnings, I really do, I'll be smiling and shaking my head all the way to the bank.
Rinks |
