P&S and STO Death Blow's Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : P&S and STO Death Blow's

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: edboyl who wrote (289)	5/15/2002 9:51:58 AM
From: exp	Read Replies (2) of 30712

Jeff, S&P acct chge means SPX fair value=770, here's why: If P/E for SPX using 2002 eps is supposed to go from 22 to 30, then it means that revised eps are only 22/30=73% of the currently assumed eps. So the SPX would also have to be 22/30=73% of the current value. So, assuming that SPX=1050 is the fair value, the new SPX fair value is 1050(22/30)=770, or 27% lower than the current 1050. So, yes, I do expect SPX to eventually reflect this lower value to some extent. We'll see if First Call and other rating agencies adopt this approach as well. This is based on this news item from a few days ago: 11:30 ET S&P to announce new standards for calculating earnings -- WSJ According to a story in this morning's Wall Street Journal, Standard & Poors is expected tomorrow to announce new standards for calculating operating results. The most controversial of S&Ps new standards would treat employee stock options as a quarterly expense against earnings. Using the definition of core earnings that S&P has just developed, the P/E of the S&P 500 would rise to 30x estimated 2002 earnings vs 22x under the old method.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next