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Strategies & Market Trends : Value Investing

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To: jeffbas who wrote (12839)	7/23/2001 11:57:16 PM
From: Bob Rudd	Read Replies (1) of 78639

jeffrey bash: SFA - Looking to answer the question: Is this a buy? [No position] I came upon this in 7/20 Merrill report excerpt: <<VALUATION: Does the present share price already reflect near-term growth concerns? As we have highlighted in our initiation report on SFA, our revised DCF value is $27. We do not take this theoretical value as a magic number, however, we do believe the poor growth outlook dictates a more cautious approach. We have downgraded our FY2002 model to fit the current environment, and expect the Company to report an EPS of $1.39, vs. our previous estimate of $1.90. In the mid to upper $20s, SFA trades at a 2002 P/E of 20x, with an almost 18% EPS decline expected in 2002 and almost zero, on average EPS growth, expected in the next four years [OUCH!]. We therefore maintain our Neutral rating and expect no positive momentum in the share price until the Company proves it can rejuvenate growth with new contracts or applications.>> It would appear this is no great bargain at current levels.

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