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Microcap & Penny Stocks : MGMA is in a position to make you a lot of money
MGMA 0.400+399,940.0%Mar 7 3:00 PM EST
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To: Judith who wrote (25)11/3/1998 5:00:00 PM
From: Walter Morton   of 175
 
Why Playboy's Price/Earnings Ratio is 60 and MGMA's is 7:

quicken.com

Playboy's five year expected growth rate is an unbelievable 223%.
MGMA's five year expected growth rate is an excellent 25%.

Playboy's P/E was 60. MGMA's growth rate is 11.2% of PLA's growth rate:

PLA's P/E of 60 X 11.2% = 6.73 (a comparative P/E for MGMA).

If MGMA achieves its goal of $.40 earnings per share by May 1999, their stock price should be:

MGMA's Earnings Per Share of $.40 X MGMA's P/E Ratio of 6.73 = $2.69 Stock Price.

MGMA's current stock price seems to be very much in line with its expected value and future earnings projections.

Therefore, at this time, I would not buy MGMA for more than $2.69 if I believed it would only achieve $.40 of earnings per share. However, if I thought MGMA would not achieve its earnings per share goals, I would pay less than $2.69 per share. On the other hand, if I thought MGMA was capable of achieving earnings per share of $.60 per share by May 1999, I would think today's stock price looked pretty good.

P.S. I am not a stock broker, licensed financial analyst nor a representative of MGMA. These are just my personal opinions.

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