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Biotech / Medical : neog - Neogen's E.Coli Test adopted by Japan
NEOG 6.410+7.2%Nov 7 9:30 AM EST

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To: JP who wrote (70)10/3/1997 5:35:00 PM
From: Kramer   of 441
 
RE /PEG/ I have been doing a little figuring myself. Using trailing earnings of 34 cents, forward estimate of 65 cents (7 quarters out) and a current price of 13.75 the PEG=.902 (fairly valued using fools pegulator). Where do I get 65 cents? I'm figuring 48 cents this year (10 Q1, 11 Q2, 13 Q3, 14 Q4), next year I'm figuring a 35% growth in earnings which would make it 65 cents. Using these numbers a price of 16 would give us a PEG=1.05 (still fairly valued) and a price in the upper teens (@19 PEG=1.24, richly valued) and to twenty (peg=1.30, the high side of richly valued) would not be out of line. If we actually get better numbers... If you look at the past numbers neog margins keep getting better as the sales go up. I think I am being reasonably conservative with these numbers too.

Best Regards,
Kevin Kramer
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