Western Digital (WDC) Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Western Digital (WDC)

WDC 161.97

-0.8%

10:40 AM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Philip Aaron Etttedgui who wrote (8196)	12/13/1997 2:51:00 PM
From: Timothy C. Madulka	Read Replies (1) of 11057

<<...And with a revise FY 98 EPS of $0.30/share that would give it a trailing 12 month PE of ~26, which would make it OVERVALUED EVEN AT THAT PRICE given Smith-Barney's 5-year EPS growth rate of 19%.>> How can you value a company like WDC based upon projected earnings? The disk drive compananies are cyclical and the projected earnings will change with the business cycle. The same is true for the semi equipment companies. A valuation using FY98 projected earnings and a projected growth rate is the same rational that people were using to state that WDC was UNDERVALUED when it was in the high 40's with $3+ in earnings and a projected growth rate of 20%. Why was WDC trading at such a low PE compared to its growth rate when conditions were looking so good? Uncertainty due to the cyclical nature of the industry. This is probably the same reason why the current valuation of WDC should not be based on FY 98 earnings alone (i.e.,uncertainty regarding projected earnings in a cyclical business).

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next