I agree that $32 is a very attractive price. A word of advice... looking at a trailing P/E, especially of a stock growing its earnings at the rate that USF is currently growing, is not a very valuable tool. Stocks move based upon forward looking earnings and growth rates. Therefore, you should be calculating P/E's based upon forward looking estimates (e.g., Price/FY '98E; Price/FY'99... in USF's case). At a price of $32 ( of course, it closed higher today), you have a FY '99 P/E of 19.4 using an FY '99 estimate of $1.65. Given that the expected earnings growth for USF from FY '98 to FY '99 is in the mid-20%s, on a relatively simplistic valuation basis this is an undervalued stock. However, it should also be noted that USF and its fellow competitors are typically valued on a Enterprise Value (market cap + Long-term Debt)/EBITDA (earnings before interest, taxes, and depreciation) basis, and not on a P/E basis (although analysts look at P/E as well)...
I still haven't purchased any share yet; however, as the market begins to make its mind up (it has really chilled out nicely as of late), I will be ready to act.
Hoped I was of some help (too tired to write any more)
DG |
