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Technology Stocks : Neoware Systems
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To: Jim Henke who wrote (199)6/17/2003 6:02:49 PM
From: MENSO  Read Replies (1) of 256
 
By this calculation NWRE appears to be UNDERVALUED:

If we assume initial earnings of $7.60 million grow at a rate of 24.50%, and we discount those future earnings at a rate of 16.00%, we arrive at a net present value for the company's next 10 years of earnings of $114 million.

To account for potential earnings beyond the 10th year, we estimate a growth rate of 6.00%, a discount rate of 12.00%, and we arrive at a continuing value of $272 million.

To complete the calculation we add these two figures together, subtract the long-term debt for NWRE ($200,000), and divide by the outstanding shares (13.9 million) to get a per share intrinsic value of $27.79 -- or almost $13 over today's close!
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