If anyone wants to give me some assumptions for revenue growth rate,
Net Profit Margin, P/E, and diluted share growth, I'll run the numbers
and post it. Also, let me know what kind of return you want on your
money, so I can calculate a buy price.
Here is a 3 year model for AOL with more aggressive assumptions.
Each column represents a full year (eg."1999" represents a
full year of financial results ending June 1999).
Growth rate assumption for Revenue: 75% per year
Net Profit Margins: 15%
P/E used for model: 125 (a premium for being the online leader)
Diluted Share Growth: 10% per year
$ in millions
1999 2000 2001 2002
Revenue $4,800 $8,400 $14,700 $25,725
Net Income $396 $1,260 $2,205 $3,859
Net Profit Margin 8.3% 15% 15% 15%
Fully diluted shares 1,295 1,425 1,568 1,724
Market Cap
(Net Income X 125 P/E) $157,500 $275,265 $482,375
Stock Price $110.53 $175.55 $279.80
Discount the $279.80 stock price in year 2002 back at a 20% return
You'd be willing to pay
$161.92 for AOL now if you believe the results presented in the model
will occur, and are willing to hold AOL for 3 years, and you are
satisfied with a 20% return on your money per year. |
