I did read all of your post....First of all, Dell is not going to grow revenues (for any length of time) at 50%..this is a pretty unreal expectation for a 25Billion company......+...unless they make a pretty large acquisition, and blowout results....there is no way that is occuring
However, this is not necessary...Dell can certainly grow revenues at 35%...and see very nice stock appreciation...remember, earnings and EPS are going faster than earnings (and have for a long time)...this trend could even accerlerate given Dell's continued aggressive stock buyback AND potential fatter margins (due to concentration on high-end line and rationalization)....so at 35% revenue growth, Dell could potentially grow earnings in the mid-40's and EPS near 50%...
Are you telling me...under this scenario.....that with (near) 50% EPS growth over the next couple years..that Dell CAN'T grow its' stock price at 30%, 35%, 40% or more? With this, you still accomplish the falling PE (you are looking for)....
"Needing 50%+ revenue growth to get back to old high"? Eh?
I don't know if your expectation is (that this will happen) in the next month...but certainly, under the scenario listed above, Dell will certainly get back to 55 by February (barring major interest rate increase).....so that would be getting back to the old high WITHOUT 50%+ revenue growth...
Dell can (easily) support a PE in the 70's if EPS growth is near 50%..this would still make a bargain compared to many of its high-tech breathen, and to the S&P 500......I don't know of any big cap, high-techs who have consistently (the key word here) at Dell's growth rate in the past (years)....AND command "only" a 70 PE for a near 50% growth in EPS (consistent, over the next two years)....
Now, lets be a bit more conservative....let's say that EPS growth is closer to 40% over the next two years.......well the same argument applies...just the stock will appreciate a bit slower....
Even still, the stock will get back to 55 in all likelihood by April....and (again) appreciate at a comfortable 30-40% rate...
Look, if Dell beats analyst estimates by 1-2 cents each quarter (going forward)..the stock is going to appreciate nicely (hands down)...1-2 cent (each quarter) upside is certainly doable at (near) 50% EPS growth...and maybe even at low 40% EPS growth... |
