Ascend Communications (ASND) Message Board

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Technology Stocks : Ascend Communications (ASND)

ASND 200.28

-1.0%

Dec 3 3:59 PM EST

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To: Techinvest who wrote (7745)	7/30/1997 3:09:00 PM
From: Praveen K. Mandal	of 61433

Looking at the P/E is not a good indicator... The P/E has to be normalized with growth rate. So assume the following: CSCO growth rate=30%, COMS growth rate=25%, ASND growth rate=40% Assume next year's earnings forecasts as follows: CSCO = $2.60 COMS = $3.00 ASND = $2.00 Finally, assume the following stock prices: CSCO = $79/share COMS = $56/share ASND = $54/share So the PEG ratio becomes as follows: CSCO = 79 / 2.60 / 30 = 1.01 COMS = 56 / 3.00 / 25 = 0.74 ASND = 54 / 2.00 / 40 = 0.68 The lower the number the better... Now, depending on which analyst you talk to, COMS growth ranges between 20% and 30% and ASND's growth rate ranges between 30% and 50% ... Based on these assumptions, ASND is the more undervalued stock and hence the reason why I own it (I own COMS too)... Enjoy and happy trading... - praveen

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