Sigmund-
Actually, it would be .41 vs. .20, and 1.06 vs. .84. That's 105% and 26% EPS growth, respectively. Actual net income growth is higher. Your point about drawing upon the reserves may be valid.
Although I foresee EPS growth of less than 30% for Q4, I expect 35% growth in Q1, the growth rate should begin to accelerate beginning in Q2 1999, with growth for the duration of 1999 in the mid 30%. It's certainly possible that in Q1 2000, when THQ may have a Dreamcast/Project X title available, as well as at least 1 WWF title (for either the existing platforms or a next-gen), 30% growth will be sustainable. The growth rate could even increase, due to the favorable trends in gross margins.
I don't think that THQ will face the same problems as RADAF. For one, there are 3 analysts who provide some exposure for THQ. RADAF doesn't have that. But it can be a problem when the market doesn't pick up on a super growth stock, and then the growth falls to sustainable levels. At that point, with THQ especially, I think that the market will offer it a higher P/E. This is somewhat ironic, but the market may be more willing to pay up for what appears to be a stable grower (30%)-like ERTS-, rather than a stock that will see declining rates of growth (THQ).
Still, the long-term picture is outstanding, and it will become clearer in a few months, as we see a more solid 1999 schedule (actually, it's really confusing now).
I think that THQ will beat Q3 estimates by a large margin, albeit not 95%. Still, I feel more comfortable with my estimates of .41.
Todd |
