" ... although Revenue has flattened out"
Yes, my misprint. That should have been "Price" has flattened out in the last 3 months as we can see in SIMO's chart.
" ... on the advancements made by others"
Companies involved in the IT hardware and software business are not often able to be described as having a Durable Competitive Advantage. Such an "Advantage" generally ensures an ongoing steady and increasing Revenue stream. That's why you will see very few such companies in a Buffett portfolio.
One thing one can be sure of in the IT business, be it cell phones, laptops, tablets, etc., if one company comes up with a money winning bit of technology that proves a winner and generates Revenue, the rest of the IT "rat pack" will be burning the midnight oil to get in on that act or come up with a similar innovative and lucrative aspect of their own. Just think of 'touch screens' ....
" ... 20x is way too high"
Well, that may be your opinion. I put forward the historical chart of what level of P/E ratios SIMO has been trading at over the last 3 years. It looks to me as if the "market" has been prepared to trade SIMO stock at a P/E between about 20 and 30. I used the lower number ....
Anyway, at the end of the day, following our individual approaches regarding SIMO's future EPS, we came to roughly the same conclusion ... your $4 and my $3.82c.
As we know, this isn't an Exact Science !! |
