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Technology Stocks : PairGain Technologies
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To: pass pass who wrote (5146)6/24/1997 1:19:00 PM
From: Chuzzlewit   of 36349
 
pass pass, I think you need to tweak your analysis in two ways: First and most important you should use the next four quarters as your base rather than the fiscal year. Second, and less important here, there should be an adjustment for the inflation rate (i.e. growth in EPS should reflect constant dollars). So even using your estimates of .70 for this year and .88 for next year we could expect earnings per share of about .79 for the next four quarters, giving a "fair" value" of $19.75.

However, the lowest estimates I've seen are $.60 for this FY and $1.00 for '98, giving approximately $.80 for the next 4 quarters and an implied growth rate of 67%. Using a much more pesimistic 40% growth rate we get 40 x .80 = $32 per share.

Regards,

Paul
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