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Strategies & Market Trends : A.I.M Users Group Bulletin Board
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To: Saul Seinberg who wrote (13288)10/21/2000 7:13:58 PM
From: Jack Jagernauth  Read Replies (1) of 18928
 
Hi Saul,

Here are a few 'cut and paste' notes about the JZGalt calculation of fair value from posts by Larry G (and maybe others) about a year ago:

First we must assume that fair value is when PE = EARNINGS GROWTH and therefore PE/GROWTH = 1 = PEG, the same holds true for YPEG which is the year forward ratio.

Price = 23.68
Last quarter earnings = 0.27
Next quarter earnings = 0.31
This years earnings estimate = 1.21
Next years earnings estimate = 1.45
Next 5 years earnings growth = 26.5%

I like Dave's method which is Next years earnings estimate times the 5 year growth estimate which is 1.45 x 26.5 = 38.42 which is fair value.

...calculations are based on the theory that fair value for a GROWTH stock is when the PE = the Growth Rate (earnings). And it is based on estimates.

Hope this helps.

Regards,
Jack
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