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Technology Stocks : WDC/Sandisk Corporation
WDC 163.00-0.4%Nov 7 9:30 AM EST
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To: Rex Dwyer who wrote (2818)4/16/1998 2:13:00 PM
From: Jerome Wittamer  Read Replies (2) of 60323
 
Brief Valuation of SanDisk Corp. as at 15 April 1998

1-the stock is currently valued at $22
2-the company has $4.55 in cash
3-you thus pay $17.45 for a share of the company at this level
4-trailing 12-months EPS are 0.86
5-instantaneous PE is 20,3
6-revenues and earnings growth is 60%
7-high-growth scenario : EPS for the 12-months to come should thus amount to 1.36c if such growth continues
8-low-growth scenario : EPS for the 12-months to come should amount to 1.07c if such growth falls to 25% (which is
unlikely)
9-Assuming the market would accept a PE of 20 in the low-growth scenario : we've got a price of $21.5 + $4.55 = $25.95
10-Assuming the market would accept a PE of 40 in the high-growth scenario : we've got a price of $55 + $4.55 = $59.55

That's in 12 months. Remember the stock market is all about anticipation. Not to early though.

In any case the stock is pretty cheap at this point but there's also no reason for the stock to be valued above $25 before June
has begun. I'd like to see incremental increases in stock value beginning July 1st. Because it's close to my birthday.

Conclusion : keep your money invested in something else for the time being and, for ounce, I am not kidding. If you don't
know any other investment vehicle, put your money in SanDisk, it is a relatively safe place. If so keep your eyes and ears
opened, technology is about change...

Any other ideas?

Thanks,

Jerome
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