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Technology Stocks : Citrix Systems (CTXS)
CTXS 103.900.0%Nov 2 5:00 PM EST
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To: Innuit who wrote (7829)4/15/2000 5:49:00 PM
From: David Montgomery  Read Replies (2) of 9068
 
A guess as to the value of Citrix stock. If accurate,
Citrix is undervalued by 20%-45%.

This is my method for estimating the value of a sound stock
(not an internet flyer). According to this calculation,
Citrix is undervalued by about 20% (minimum) and maybe 45%
(maximum).

1. Estimate of present value of Citrix stock:

Estimated value is between $66.14 (min) and $94.18 (max).

Assume: EPS for year 2000 is 0.88, 50% growth rate,
earnings discounted to present value at 6% rate.

"EPS 50% Growth" = projected earnings at 50% growth rate
"PV EPS 6% disc" = "EPS 50% Growth" discounted to present
at 6% rate.
"PV Earnings 0-9" = present value of earnings for years
2000 thru 2009.
"PV Earnings 0-10" = present value of earnings for years
2000 thru 2010.
"PE" = "AVG" / "EPS 50% Growth"

The PE of the stock will be that of a conservative stock in
3 to 5 years. This permits some reevaluation of what will
happen to the company as events unfold over the next 3
years - and maintains the optimism that should be
associated with a company that is a leader in an emerging
and growing market. If the growth potential continues to
look good, the PE of the stock should climb accordingly.

EPS PV EPS
50% 6% PV EARNINGS
Year Growth Disc 0-9 0-10 AVG PE
0 0.88 0.88 66.14 94.48 80.31 91.26
1 1.32 1.25 60.84
2 1.98 1.76 40.56
3 2.97 2.49 ---> 27.04 <---
4 4.46 3.53 18.03
5 6.68 4.99 ---> 12.02 <---
6 10.02 7.07
7 15.04 10.00
8 22.55 14.15
9 33.83 20.02
10 50.75 28.34

2. Estimate of future value of Citrix stock:

This is the same calculation as above with EPS at 50%
growth rate calculated through 12 years. The present value
of earnings in years 1 and 2 are calculated looking forward
9 and 10 years. The estimates of the stock price are
$113.65 per share in 1 year and $160.82 per share in 2
years.

EPS PV EPS
50% 6% PV EARNINGS
Year Growth Disc 0-9 0-10 AVG
0 0.88 0.88 66.14 94.48 80.31
1 1.32 1.25 93.60 133.70 113.65
2 1.98 1.76 132.45 189.19 160.82
3 2.97 2.49
4 4.46 3.53
5 6.68 4.99
6 10.02 7.07
7 15.04 10.00
8 22.55 14.15
9 33.83 20.02
10 50.75 28.34
11 76.12 40.10
12 114.18 56.74
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