ME: "The key is how much a share will IFMX make 2 years later. If it is around $1.00, which is possible, than there is nothing wrong with it having a P/E of 28 at the end of this year, in fact a P/E as high as 50 would be within reason. Using this as a basis, Informix could get back up to a price of $10.00 a share by the end of the year. "
CHARLES: "Actually I think this analysis of the stock's prospects is even more scary than mine. What you are saying is that if a company that has been cost-cutting and has had other problems, that is in an industry now growing in the low double digits as a percent, were to amazingly grow its EPS at more than 100% per year for two and a half years, the reward would be a ten dollar stock, less than 50% growth in value per year for two years. Very approximately. Yeesh. And that's the upside."
Realize that $1.00 a share is not undoable. We have seen over 700% EPS growth in one quarter <chuckle>. Of course such a statement is totally misleading, but realize that percentage growth is a misleading concept when talking about such a beaten up company and a beaten up stock. Remember, I too have expressed concerns about this stock being overpriced, but it is a better value now, then it was last December when it was at four -- why -- well, positive earnings, a positive book value, customers are no longer worried about Informix folding. This company can earn 25 cents a quarter. It won't happen before the year 2000, but I think we will see it soon.
The database industry is in a lull. We have only scratched the surface of the era of the information age.
- RDH. |
