Compaq Message Board - Msg: 2888061

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Technology Stocks : Compaq

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To: William Hunt who wrote (10239)	12/5/1997 1:21:00 PM
From: Andreas	Read Replies (2) of 97611

For those of you comparing dell to cpq here are a few statistics which I find helpful and relevant. CPQ DELL Price: $64.50 $92.375 EPS 2.16 2.32 P/E: 29.7 39.40 Return on Equity: 18% 75% Proj. 5 yr. earn. growth: 24.3% 29.4% Net Profit Margin 7% 8% Zacks mean recomm. 1.6 1.9 Current Ratio 2.2 1.6 Debt/Equity: .01 0 Bk. Value/Shr. 11.32 3.13 Institut. Ownership: 81% 57% Place whatever weighting you choose on these various factors. Yes, Dell has a higher projected five year earnings growth rate, is less owned by institutions (a plus). However, Dell's P/E is substantially higher than cpq's (To me, Dell's P/E is not justified by the projected slightly higher earnings growth rate). Furthermore, Dell profit margin of 8% vs. 7% is not that significant in light of mix and sales volume differences between the two companies in the future. Also, note as an added plus on the cpq side of the equation that book value is substantially higher (not all that relevant but a plus nonetheless). In the final analysis the P/E is the most telling and tips the scales in favor of cpq. I hope the above stats. are helpful. By the way, Steve, thanks for the reference to options strategy. Too much there to read in one sitting today though.

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