To all,
Hopefully this post adds substantive information about PeopleSoft (PSFT) and squelches some of the miss-information being placed on this thread. The information presented below can be supported from a variety of sources, including PSFT earnings and annual reports, PSFT product releases and news announcements (see www.peoplesoft.com), Investors Business Daily news articles, and price/volume history charts.
As for History...
Over the past five years, PeopleSoft has been one of the most sustainable and consistent growth stocks on the market. The company size, earnings, and stock price have been on a tear - growing anywhere from 80% to 100% per year on an annualized basis. And over the past year, quarterly earnings per share (EPS) growth accelerated from 82% to 100%:
4Q95 82% increase
1Q96 89% increase
2Q96 91% increase
3Q96 100% increase
PSFT stock has split 2-for-1 three times in the past three years, increasing the number of shares outstanding from approximately 25 million to approximately 100 million. During the same period PSFT's market capitalization increased 526%, once again proving its rapid growth rate:
Nov 94: 2-for-1 ($60/shr pre-split or $30/shr post-split), Market Cap = $0.75 Billion
Nov 95: 2-for-1 ($86/shr pre-split or $43/shr post-split), Market Cap = $2.15 Billion
Dec 96: 2-for-1 ($94/shr pre-split or $47/shr post-split), Market Cap = $4.70 Billion
PSFT was formed in 1987, and has performed very well over their ten-year existence. 1) The company is still in business, 2) they compete well against mainstays such as SAP and Oracle, and 3) they continue to gain market share with expanding product lines, product upgrades, and customer service. Today, PSFT commands around 20% (maybe more) of the client server (C/S) software applications market, placing them just behind SAP and Oracle. PSFT does pose a threat to their competition, especially SAP, with their recent release of PSFT Financials and Manufacturing. Also, PSFT is noted for superior customer service, SAP is not.
As far as PE is concerned, PSFT has always sported a very high PE. From what I observe, this is consistent with rapidly growing companies and stocks. Over the past two years PSFT's PE has been anywhere from 80 to 110. During the same two years, the stock has appreciated over 400%. So if you were PE adverse, you missed out on one of the best performing stocks of the 90's. Admittedly, there are many factors to consider when buying growth stocks, but I believe PE is not one of them. If you don't agree, then I suggest you read William J O'Neil's book, "How to Make Money in Stocks". William J. O'Neil is known for developing the CANSLIM system, which has produced some very successful investors (including me). With CANSLIM, sustainable and consistent EPS growth is the mark of superior companies and stocks, not PE. Why has PSFT been so successful? Re-read my leading statement in the first paragraph under "As for History...".
As for the Future...
PeopleSoft continues to successfully develop new product lines while staying close to their core competency - C/S Application Software. Each product is released with widespread customer enthusiasm and their products are taking hold in all market including the Fortune 500, US Government, Department of Defense, Academia and overseas.
PSFT customers are renewing their maintenance license, signing up for new releases, and are satisfied with their customer support. If they weren't, would the company continue to grow as fast as it has over the past five years?
PSFT is making a significant push into the Latin American, Asian and Australian market, again demonstrating their zeal to grow. If they successfully tap these markets, as they have in North America and Europe (SAPs backyard), then they will continue to perform well and sustain their torrid growth pace. Additionally, PSFT just signed deals with Kaiser Permanente and the Texas State Government. Sounds to me like a company that continues to hustle and move. For my education, can anyone tell me what the competition has done lately?
I believe PSFT will continue to grow, take market share, and prosper.
A word of advise...
Investors must stay on top of what their companies are doing. Don't take this or any other on-line information for granted. Check it out, do your homework, and prove to yourself which companies are worthy of your money. I am sold on PSFT for reasons that entice me. I don't let the "crap" on this or other threads bother me, I just go back to my research and move on. I just wish more people would provide solid facts and well reasoned information on these threads. I am tired of the mud slinging, name calling, and bad mouthing. It serves no good purpose to anyone but the initiators ego and self esteem. Happy investing. |
