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Technology Stocks : PSFT - Fiscal 1998 - Discussion for the next year
PSFT 0.00010000.0%Oct 29 5:00 PM EST
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To: David W. Ricker who wrote (1642)7/28/1998 3:40:00 PM
From: Chuzzlewit  Read Replies (4) of 4509
 
David, I agree with most of what you said. Right now I think we're dealing with a growth perception issue. We were told to expect PSFT growing at roughly 60% per annum going forward rather than the 70% to which we had become accustomed. Apparently companies are putting off installing ERP solutions in favor of quick fixes for the y2k problem. But this cloud has a silver lining. Administrative support for rapidly growing companies can be a real problem. Somewhat more deliberate growth rates can alleviate some of those infrastructural problems. I also have to believe that the corporate buyers are simply delaying the inevitable purchase of software, so we may see a resumption of hypergrowth (not that 60% is anything to sneeze at) in a year or so.

I am conservatively estimating earnings at roughly $.84 for the next four quarters, which yields a forward P/E of around 46. This is a considerable discount to the market. PSFTs PEG would be .77 compared to the PEG of the S&P500 of around 2.7.

I have come up with a metric normalizing PEGs with respect to the market called CNPEG (Chuzzlewit's Normalized PEG) wherein you divide the PEG of the stock by the PEG for the market. This yields a CNPEG of around 0.3. That tells me that in relation to the rest of the market PSFT is a screaming buy.

TTFN,
CTC
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