<<Phil, I'm pretty bad at math myself. Could you please lay out for me
what Apple's PE would be at a price of $69, based on your projections
for their earnings estimates? I would be grateful if you would explain
*how* you use the numbers to arrive at a PE.>>
Michael,
It's my pleasure to elaborate more regarding PE here. Currently, we
have $0.33 and $0.38 of nets for Q1 and Q2 '98 respectively.
Therefore, if we use $0.71 to compute PE in '98, the calculation is as
follows:
30.4375/2x(0.71) = 21.434 provided that we have similar Q3 and Q4
to Q1 and Q2; It's standing at 21.434 PE at the current price of
$30.4375.
I derive $69 based on the stock price climbing ratio of the first 4+
months of '98, the actual number should be: X/30.4375 = 30.4375/13,
which yields x = 71.26.
You ask: what is PE value when the price reaches $69? The calculation
is as follows:
69/x = 1.97 -> x = 35, based on the assumption that Q3 net is $0.58
and Q4 net is $0.68.
When comparing to Dell's 67+ PE and Gateway's 73+, Compaq's expected
50+ PE, Apple's 35 PE is feasible under the current condition of
gradual revenue/net improvements.
Again, my derived $69 was straightly from the increasing stock price
ratio of the first 4+ months, which doesn't intend to estimate the
price from PE initially. Hence, whether or not $69 is too high will
totally depend on Q3 and Q4's revenues/nets as well as overall tech
stocks trend in the next six months.
Phil |
