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Technology Stocks : Dell Technologies Inc.
DELL 133.20+5.7%Nov 26 3:59 PM EST
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To: William C. Spaulding who wrote (686)12/1/1996 7:19:00 PM
From: Patrick E.McDaniel   of 176387
 
William, the only problem is the market is always looking to the future and anticipating the future value of stocks.

I agree the only solid figures are trailing earnings. However, if the market only reacted on traling earnings then a stock should do nothing until the earnings report for the next quarter. Then if earnings increased the stock would spike up and remained flat until the next quarter.

To be honest I never consider forward looking P/E ratio's. I do consider future earnings. For example if Dell comes in Q4 at my estimate of $1.89 then Dell's annual trailing earnings would be $5.30. Then the question is at what P/E should it be valued at? Somewhere in the 20-25 range would be pretty safe as long as the overall market conditions do not change. That puts Dell at "fair value" of $106-$132.5. Splitting the difference comes up with $119.25 as of February 11th next year.

Considering recent demand and the market putting a premium on high growth stocks Dell could possibly double last years earnings of $2.72.
If Dell does it 100% growth in earnings will put Dell at the higher end of the trailing P/E range and get a lot of attention.

There are many indicators along the way to determine how Dell will do. From the company to analysts to news agencies and industry press releases. This has worked for me in the past, yet we do know market share and the size of the pie are always changing so I'll keep rolling along until I find a better method and let uncle Mike worry about Japan.

Pat
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