I have been following CCSC since it made my undervalue/high growth screening since late June. After reviewing the company fundamentals and having spoken with the IR people (I am very impressed with the company,overall) I took a large position in it. Here is my analysis for your comments:
Using the past 5 year worth of financial data, I calculated the folowing CAGR:
Sales CAGR: 32%
Gross Income CAGR: 38%
Net Income CAGR: 163%
EPS CAGR: 137%
Using the sales growth rate, I estimated the sales for 1997 and 1998. Using the current NI/Sales ratio of 0.17 based on past three years and the shoare outstanding of 15.5M, I calculated EPS for 1997 and 1998, $0.79/s and $1.04/s, respectively.
Based on historical P/E multiples, I calculated an average high P/E of 31 and low P/E multiple of 9. Based on the faster EPS growth rate of CCSC to the industry (16.3% - 3 yr avg, 12.7% - 5 yr avg), I adjusted its current P/E of 34.8 to 37 (20% above historical average since they have better growth rate of sales and EPS). Based on the above I calculated average 1997E price of $29 and $38 for 1998E. I verified my calculation against the concensus (1997E - $32 and 1998E - $41) and they are close. Hindsight, I should have used a 31% above historical average based on sales to be closer (Industry P/E - 29.2, Industry sales CAGR = 22.3, adjusted P/E company = [29.2/22.3*31]= 40.6) but I did not think a P/E of 41 was reasonable for this company.
Anyone with other insights or comments on this company, pls share it with me. Happy many returns... |
