i guess he is figuring what a stock is worth based on a longer term hold, since he is using the growth rate over the next 5 to 10 years (good luck figuring that out accurately these days <g>, but with many small companies you can at least give them a presupposed minimum below which you probably wouldn't want to own them anyway)
if HELE grew at 15% a year, using earnings of 2.40 for next year, it would be several years before it would be worth 67 bucks, but if you give it a multiple of 20, which isn't out of line for the industry, and is more than fair for HELE, which is growing much more rapidly than the industry average, then a target of 45 to 50 seems reasonable at this point
the main argument against HELE in the past has been that they don't have positive free cash flow, apparently because they keep building up inventories, and had bought some equipment...i don't see cash flow in today's report, it will be interesting to see what it looks like in the 10Q
carl |
