>EMC How low can it go?
Take a look at this ten year summary for EMC:
moneycentral.msn.com
Historically, the PE is the highest its ever been. The low point of the PE is 9.4, which was back in 91. Of course, this was before EMC hit the "sweet spot" of its growth curve, so I think today people would be willing to pay a higher price for higher growth. The ten year average for the PE is 24.87. Trailing earnings is .71. Using the average, we can arrive at 24.87 * .71 = 17.65. Of course, that's only for trailing earnings. If we use forward earnings, we get: 24.87 * 1.02 = 25.37. I think a more acceptable PE to use, however, would be somewhere closer to 45, which would represent a PEG ratio of 1.5 on the 5-year growth rate of 30% (in order to account for things like Gorilla Status, high quality, etc). Looking out 5 years, then, we get:
2001: 45*1.02 = 45.90
2002: 45*1.33 = 59.85
2003: 45*1.73 = 77.85
2004: 45*2.25 = 101.25
2005: 45*2.93 = 131.85
This is, of course, just my back-of-the envelope analysis. |
