I didn't get it either...until I got back to basics and did some number crunching. CY's earnings are -80% YTD over what they were last year YTD. The estimate for '97 is $.37 eps, and $.89 eps for '98. This means that IF CY hits its number this year, it is trading at a multiple of around 50, and if it hits its number in '98, the multiple is about 21...which is the current market multiple. '98 is a long time to wait to see the PE drop to current mkt multiple levels. BUT THE REAL STORY here is that CY currently trades at a PE of an astounding 109 or so based on annualized ytd earnings of $.15. The historical PE for CY based on the figures from 1992 to 1996 are as follows:
High = 47
Low = 21
Average = 34
If you exclude 1992, a whacky year, the PE's are:
High = 26
Low = 13
Average = 19.6
Looking at Normalized PE's for CY is helpful, and many say is what counts instead of historical PE's. These are as follows:
High = 30
Low = 13.8
Average = 21.9
The PSR is around 3.0, which is greater than the historical high of 2.62 and the average of 1.9
The long and short of it is that CY is trading way outside its PE range on a historical and on a normalized basis. The sad news is that this may continue into '98.
Extrapolating future prices from PE's is a treacherous undertaking...but here goes: In 1998, IF CY HITS ITS NUMBER AS CURRENTLY ESTIMATED, one can expect it to trade in the average range of $17 to $19.50 per share. The High range is $23.31 to $26.73. This assumes that everything goes just right, and that no negative developments occur.
This stock, as pointed out in a recent post, has been a real heartbreaker. Despite upgrades, it non-performs. It clearly demonstrated weakness today by not participating in the rally, even to a small extent. I don't really think it is a good long term play. Perhaps the best thingto do is to trade it short term, make a few bucks, and forget the Warren Buffett approach of trying to buy good companies and hold them forever.
I have been long CY to the tune of 3300 shares over the last 3 years and it has been dead money. I have sold all but 1800 shares, and will dump these at the next upside trading opportunity. I hate to say it, but CY looks and acts like a loser now and probably going forward, at least as a long term play. There are better places to put my money...so watch out, TJ, here comes my towel!! |
