RtS, from what I have observed since I have been keeping tabular data, and looking at stock "price action" over either a short period, or long period of time, correlation to any parameter is dicey at best. I do agree that correlation will exist over some period of time, but in general, that period of time will be different depending on many other variables that happen to be affecting the stock market at that particular time - whether it be economic or political.
I have kept a table of LRCX since Jan 04 that shows earnings changes and stock price changes. Any time there was a change in "this year" or "next year" earnings I noted the data and the stock price at that point. The results are below.
- LRCX HISTORY
- SUM PRICE
- EARNINGS EST 2 YR CLOSE PCT PE PE
DATE CURR YR NEXT YR EARN PRICE CHG CURR YR NEXT YR
1/9/04 0.33 1.10 1.43 34.58 0 105 31
1/16/04 0.34 1.10 1.44 34.24 -1 101 31
2/7/04 0.43 1.41 1.84 27.42 -21 64 19
3/12/04 0.44 1.41 1.85 24.88 -28 57 18
4/2/04 0.43 1.43 1.86 26.99 -22 63 19
4/9/04 0.51 1.42 1.93 26.66 -23 52 19
4/16/04 0.51 1.64 2.15 24.71 -29 48 15
5/21/04 0.51 1.63 2.14 22.55 -35 44 14
6/4/04 0.51 1.64 2.15 24.27 -30 48 15
6/25/04 0.51 1.65 2.16 25.96 -25 51 16
7/23/04 2.15 1.70 3.85 22.64 -35 11 13
7/28/04 2.34 1.70 4.04 22.72 -34 10 13
8/6/04 2.33 1.69 4.02 21.40 -38 9 13
8/13/04 2.38 1.69 4.07 19.95 -42 8 12
8/27/04 2.38 1.61 3.99 22.36 -35 9 14
9/10/04 2.38 1.42 3.80 22.16 -36 9 16
9/17/04 2.37 1.42 3.79 22.47 -35 9 16
10/1/04 2.35 1.44 3.79 22.62 -35 10 16
10/8/04 2.26 1.51 3.77 21.62 -37 10 14
10/15/04 2.23 1.52 3.75 21.75 -37 10 14
10/22/04 2.05 1.83 3.88 23.89 -31 12 13
11/18/04 2.05 1.82 3.87 28.05 -19 14 15
11/26/04 2.03 1.84 3.87 26.64 -23 13 14
12/24/04 2.03 1.85 3.88 28.18 -19 14 15
12/31/04 2.03 1.87 3.90 28.91 -16 14 15
1/21/05 2.05 1.85 3.90 26.72 -23 13 14
1/28/05 2.04 1.84 3.88 26.60 -23 13 14
2/4/05 2.04 1.82 3.86 28.96 -16 14 16
2/25/05 2.04 1.83 3.87 31.98 -8 16 17
3/11/05 2.04 1.85 3.89 28.61 -17 14 15
4/22/05 2.10 1.82 3.92 26.89 -22 13 15
5/13/05 2.10 1.83 3.93 27.25 -21 13 15
5/27/05 2.11 1.83 3.94 29.75 -14 14 16
6/24/05 2.11 1.82 3.93 28.88 -16 14 16
7/8/05 2.11 1.80 3.91 28.99 -16 14 16
7/22/05 1.46 1.80 3.26 28.98 -16 20 16
7/29/22 1.37 1.82 3.19 28.45 -18 21 16
9/2/05 1.36 1.82 3.18 30.13 -13 22 17
10/7/05 1.38 1.82 3.20 30.32 -12 22 17
10/14/05 1.60 1.91 3.51 33.44 -3 21 18
10/21/05 1.61 1.90 3.51 34.44 0 21 18
11/18/05 1.62 1.91 3.53 37.49 8 23 20
There are many observations that can be made about the table and the action of LRCX over this period. I will list a few. Looking at a chart over this period of time while reviewing the table is very helpful.
1. Starting with Jan 04, earnings estimates were low and the stock price high - giving PE's of 105 and 31. Note that this past Friday's close was the first entry in the table to exceed the first entry in the table.
2. Compare the 8/13/04 entry to the 1/9/04 entry. Now the PE's are 8 and 12 and the stock price 19.95 - no correlation there. Incidentally, this would have been a great time to buy. There was a triple bottom on LRCX in Jul, Aug, and Sep.
3. LRCX languished in the 21/22 area until Oct 04 - then prices went to the 26/28 area - but also note, not much of a change in estimates during that period. The 2 year estimate sum stayed in the 2.70/2.90 region. Actually, the estimates stayed in that area until 7/22/05, when they DROPPED to the 3.20 region. Note that stock prices stayed in the high 20's - no correlation there.
4. Since the end of July, stock price has been rising. It took a "jump" after the Oct earnings report - look at a chart - or note slight estimate increase from 3.20 to 3.50. Not much change there, but stock price is jumping. No correlation there.
5. However, it seems fair to say - there is correlation over the long term. Earnings estimates have stayed at good levels over several quarters. As you know, the weekly tables for many months kept LRCX in the top spot in the Group when sorted by PEG. Value has won out over the long term, but it took quite awhile to be reflected in the stock price.
Don |
