"Whats your opinion of JDSU's earnings ?"
1. Jdsu is and has been guiding toward 15%+ sequential growth for YEARS to come and says it is being conservative.
2. They just did 40% sequential, 22% from internal growth.
3. operating profits appear to be running at about 22% of gross revenues, a terrific number.
I take the management projections at face value and then simply want to see what fair price is. We can apply 30x revenues to the current run rate and we get a price close to what it is at now. I think that is fair. However, this doesn't properly discount the nearly 100% compounding growth the business is doing for "years to come." Or, we can do a peg ratio on the current run rate of .44 oe, and we get a peg of about 1, which is pretty cheap.(This assumes the 154% growth they just achieved). I think if we are very conservative and we assume a pe of 100 on this years e, we get a price of 60. Even if we use that as a current fair value but compound it at managements expected 100% rate, we get a price of $1,920 in 5 years, making the current price ridiculously low.
I have essentially put 2/3 of my Qcom and all my Csco into a position in JDSU. A lot will have to go wrong for it not to be an incredible multi-year hold.
1,920 would give it a market cap of 1.3 trillion. Somewhere along the line, gravity will exert itself, but we still have a good margin of error. |
