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Technology Stocks : Western Digital (WDC)
WDC 163.33+3.5%Nov 28 9:30 AM EST
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To: Brian Lempel who wrote (7819)11/23/1997 9:59:00 PM
From: Pierre-X  Read Replies (1) of 11057
 
Re: Multiples, again

Brian, perhaps my information is wrong but:

1. The HIGH end of company guidance is $1.70 for F98. The low end is $1.50, which given current guidance for 20-30 cents in 2Q98 is quite possible.

2. Using the HIGH guidance, against Fri close of 21 15/16 = FORWARD PE of nearly 13.

3. A PE of 13 is already above 5-year historical average for WDC.

4. Furthermore that 5-year average is upwardly biased because the last 5 years have been bumper years for the company.

5. You are looking for a PE of 14.5, which is in the HIGH end of the historical range. Against the low guidance of $1.50 the forward PE is already 14.6.

6. We will NOT see rising multiples until the entire DD sector turns around.

Let's discuss. Which specific points do you agree/disagree with?

PX
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