Valuation:
Management has just said that forward 12M EPS (YE 12/01) might be a bit lower. Maybe 0.98, instead of 1.03. Around a dollar, anyway, no major revision.
And the stock has just crashed through former support, so it now needs to establish a new trading range, form a base, before heading back up. I won't get into when the upturn might be, because I think that depends on what happens with the overall economy, and I don't think that's knowable yet. That is, the best we can do now is try to guess the bottom. Timing the upturn isn't possible, but I don't think it'll be soon. It's going to take some time before the forward earnings stream reliability is restored. At least a couple of quarters, maybe more.
The bottom, it seems to me, is when the last momentum guesser has sold, and Value buyers step in. When will that happen? If 35% is a reasonable estimate of expected future longterm EPS growth rate, and the forward EPS is $1, then you have a PEG of 1, at a stock price of 35, about where the stock bounced today.
I caught the falling knife, buying EMC at 50. Obviously, I was wrong about support at that level. So, I'm going to sell on strength, and wait for a new support level to form. If we bounce again in the mid-30s, I'll probably buy. |
