To All:
I just spent a week to complete a cross-sectional statistical analysis
on all 129 companies in SI's semi group, using stepwise regression.
I try to figure out how semi stock prices are affected by consensus
estimates of 1996 EPS, 1997 EPS, long term annual growth rate, book
value, long term debt, institutional ownership, and market
capitalization. I am fairly confident with my results because my
empirical equation explains 85% of variation in the semi stock prices.
I used this empirical equation to estimate 'fair' price for each stock
in the group to see where each issue is at relative to its peer in the
same group. I then sorted this list and picked several most
undervalued stocks as my candidates. I found that EXAR is among my top
picks with a fair price of $24, given the first call consensus
estimate and company fundamentals (shown below.)
First Call Consensus Estimate
Yr. Ended Mar. 97 .94
Yr. Ended Mar. 98 1.51
LT Future Growth Rate 20%
Price to Book 1.0
% LT Debt to Total Cap 1%
Owned by Institutions 72%
Market Capitalization 120 Mil
You may insert into the attached equation other semi companies' data
to estimate their 'fair' prices. I also tested many other company
variables, but they are all insignificant. Therefore, the final
equation includes five variables: 1997 EPS ($), estimated short term
EPS growth ($) from 96 to 97, estimated future long term annual growth
(percentage), institutional ownership (percentage), and market
capitalization ($mil.)
From here I will do my case study on these companies including EXAR.
I would appreciate any information regarding EXAR's market,
competition, strength, weakness, etc. Thanks.
Attachment:
DEPENDENT VARIABLE=PRICE
Analysis of Variance
Sum of Mean
Source DF Squares Square F Value Prob>F
Model 5 18904.12372 3780.82474 97.382 0.0001
Error 85 3300.08681 38.82455
C Total 90 22204.21053
Root MSE 6.23093 R-square 0.8514
Dep Mean 20.90374 Adj R-sq 0.8426
C.V. 29.80776
Parameter Estimates
Parameter Standard T for H0:
Variable DF Estimate Error Parameter=0 Prob > |T|
INTERCEPT 1 -7.986190 3.09239022 -2.583 0.0115
EPS97 1 10.148690 0.87265240 11.630 0.0001
STGROWTH 1 2.481818 1.20431902 2.061 0.0424
LTGROWTH 1 0.425676 0.10898297 3.906 0.0002
INSTITUT. 1 0.096937 0.02847941 3.404 0.0010
CAPITALZ. 1 0.000428 0.00008848 4.835 0.0001 |
