Echelon Corporation (ELON) Message Board

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Technology Stocks : Echelon Corporation (ELON)

ELON 21.88

+10.1%

Oct 6 5:00 PM EST

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To: Bridge Player who wrote (2921)	1/19/2002 12:38:50 PM
From: AE	of 3076

High debt is definitely a concern. However with low interest rates and many customers refinancing the debt can be managed without much risk. I am not a believer in technical analysis. I prefer to look at the fundamentals of the individual stock. Even if the dow falls significantly that is only 30 stocks out of a market of over 5000. I think ELON has demonstrated their ability to perform in a declining market. Their products seem to produce savings as well as additional profits. The combination is very appealing in any market especially in a down market. In addition the ROI for their products is fairly quick according to KO. The management team has produced 6 consecutive quarters of earnings indicating that they are serious about managing the business for profit. With $16 million in profit forecasted for '02 and a PE of 35 the market cap should be around $560 million. With growth rates over 100% for revenue the PE can justifiably be higher. In addition, KO said earning would be lower by $0.03 a share for the beathome acquisition although he believes that future earnings should increase significantly because of the purchase. Without the purchase the market cap would be about $40 million higher ($1.2 million earnings PE of 35). Assuming earnings grow year over year of 30% 2003 earnings should be at least $22 million a PE of 35 is a market cap of $770 million. That would be a 15% stock appreciation for 12 months. I think these are fairly conservative estimates. Granted 15% return isn't great for a small cap stock with the inherent risks however given the rest of the market and their proven ability to execute I am happy to be long. Also if ELON gets another Enel or two over the next two years the upside is significantly greater. Just my two cents. AE

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