Cisco Systems, Inc. (CSCO) Message Board

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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 76.11

+0.9%

Nov 21 9:30 AM EST

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To: bambs who wrote (40165)	9/28/2000 8:07:11 AM
From: Monty Lenard	Read Replies (3) of 77400

bambs, since everyone is throwing around valuations here is one to consider. CSCO must grow earnings at a rate of 31.6% annually for 10 years to justify its current stock price of $57.31. If we assume initial earnings of $2.67 billion grow at a rate of 27.29%, and we discount those future earnings at a rate of 11.00%, we arrive at a net present value for the company's next 10 years of earnings of $61.1 billion. To account for potential earnings beyond the 10th year, we estimate a growth rate of 6.00%, a discount rate of 12.00%, and we arrive at a continuing value of $223 billion. To complete the calculation we add these two figures together, subtract the long-term debt for CSCO ($0), and divide by the outstanding shares (7.02 billion) to get a per share intrinsic value of $40.40. Monty

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