Comparing Seagate, Western Digital and Quantum, using first call and 10/31/97 closing prices SEG's PE is 23.4, WDC's PE is 9.5 and QNTM's PE is 12.5. The closing prices are SEG $27 1/8, WDC $ 30 and QNTM 31 5/8. The most recent actual fiscal year earnings and the next two annual estimates are SEG 3.05(A), 1.31(E) and 2.67(E); WDC 2.85(A), 3.38(E) and 4.10(E); QNTM 1.03(A), 2.67(E)and 3.29(E). The PEG based on 1998 calculated mean is SEG .58, WDC .40 and QNTM .47. The PE's on the next two years estimates are SEG 20.71 and 10; WDC 8.87 and 7.32; QNTM 11.84 and 9.61
All numbers are confirmed. There's nothing to debate. However, I doubt how a company should be valued when earning is temporarily depressed due to some temporary problems. I remember quite a while ago when someone on this thread compared SEG to BA (Boeing) and concluded BA's CEO has better vision than SEG's Alan Shugart. Ironically, BA is now hit with temporary parts shortage and will be losing money from their operations in the short-term. So, how do you value BA at this point??? Do you use immediate earning or forward earning or something else?
The way I see it. PEG is a very good value indicator but it's not everything. There're still some other value indicators that are frequently overlooked, such as P/S and P/B ratio. Using the sales number for the past 4 qtrs and the current book value, I found
ÿÿÿÿÿÿÿÿÿÿÿÿbasisÿÿÿÿÿP/SÿÿÿÿÿÿÿÿÿÿP/B
Seagate 28.375ÿÿÿÿ0.79ÿÿÿÿÿÿÿÿÿ2.0
Quantumÿÿÿÿÿ33.1875ÿÿÿ0.73ÿÿÿÿÿÿÿÿÿ4.2
WDCÿÿÿÿÿÿÿÿÿ30.75ÿÿÿÿÿ0.60ÿÿÿÿÿÿÿÿÿ3.9
What does that mean? Ask yourself and consult Warren Buffet's books for help... |
