<Westell's profit margin is at over 30% today, why are you using 20%? ..>
First of all, cause that's the number we've been using this evening. But it was a reasonable guess that competition would squeeze margins to around 20%. Maybe it'll be closer to 25%. Then earnings would be .58 and fair value would be $20 in April of 99 (conservative) or in Apr 98 (aggressive).
Personally, with so much unknown, I would want to err conservatively and would have to be able to live with the more conservative estimates ($16 or less in 99).
Right now for me, as an investment to just hold, WSTL (and ADSL) is too risky. Once contracts are announced, I would have to see what kind of valuations we get.
As a trade, I might consider buying in the 8-9 range if it got there, but would be concerned. I don't like this undefined medical leave stuff at all. I think the market agrees. When CEOs get sick with REAL diseases, the stock can suffer. Any chance Seamans steps down? And where are those contracts?
Steve |
