Compaq Message Board - Msg: 3719296

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Technology Stocks : Compaq

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To: Robert Sherman who wrote (21930)	3/15/1998 8:02:00 PM
From: van wang	Read Replies (1) of 97611

Robert I am going to save you some money...dont kill the messenger investor should look at forward PE not trailing...the price you pay is for future cashflows and not past...FY 1998 earnings for CPQ is $0.88 cents and for FY99 $1.68...so CPQ is trading at 28.6 X FY 98 earnings...that is fine if their growth rate was 30%...but its projected to be 20%...so its forward PE is 1.45X its growth rate...if PE trades at growth rate (fair value by convention) then CPQ is $18 IBM FY 98 eps is est. 6.52...the current share price trades at 14.6X forward...its growth rate is 10%...its PE is about 1.45X its growth rate the reason IBM is better IMO is the predictability of its earnings, brand name and corporate relationships....lower risk...CPQ has many near term issues...so if sector moves...IBM will fair better up or down IMO

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