Jonathan Labed, are you some kind of joke? Why would a distributor earning $.80 a share, trade at $30 (that's a P/E of 38, buck-a-roo).
I'd say discount next year's expectations by 20% or so due to share dilution, an economic downturn, and a general dearth of blockbuster games on THQ's horizon. (Remember, '97 was planned to be the blow out year with PAX, folks. There's no PAX '98). That gives you about $.85 next year, or 6% growth. Be generous and award a P/E of 14 (i.e., three times the 1998 growth rate). That gets you to $12 - a value considered to be high just 6 months ago.
Remember, the market was up over 20% in 1997. We're due for a correction, etc. It may not even require fundamental change for THQ to crash. So far this year THQI is falling twice as fast as this overvalued market is, and I expect it to continue.
That's my spin. Now, how do you arrive at $30? Or do you just call names? |
