Presstek is certainly interesting...
I can understand a person who knows little about this company and
its potential just looking at the fundamentals and saying...what?
Earnings are definitely growing, but not at an unbelievable pace,
just steadily rising with great consistency. Certainly what you say
about a backlog and earnings kicking in in 1997 must be believed by
a lot of people who follow this stock. The street takes their
earnings in great stride. Since no major brokerage firm that I know
of follows the stock, there is no distinct expectation, thus no
disappointment or definite surprise. It is also interesting that the
day after earnings release the volume drops significantly from the
previous two days volume. PRST has loyal followers who believe in
their technology and earnings potential. While at the same time there
are those who short and then go long trying to play the stock.
As far as the PE goes, if you say that earnings remain flat the rest
of the year (of course, that will not happen) "forward" PE is about
280. If earnings grow by 20% each quarter, i.e $0.12, $0.14, $0.17,
and $0.21 for yearly $0.64, then forward PE is 203. Still high, but
if they maintain steady growth it can be sustained. Of course if
earnings start to explode as more and more color plates are used up,
the PE might be considered less than 150 right now (looking 9 months
ahead). The only estimates I've seen for PRST earnings was in a
stock report by Pennsylvania Merchant Group Ltd that came in the
investors kit I ordered a while back (great info by the way). Their
estimates were for
FY 1996 - $0.70
FY 1997 - $2.42
FY 1998 - $5.59
FY 1999 - $9.12
FY 2000 - $12.69
At least at this point in 1996, they seem to be in the ballpark. The
report was written on 24 Nov 95. If it starts looking like $0.70
will be beat in 1996, the stock could do even better. I feel that
eventually the PE has to get down to below 100, but that might not
be for a few more years. I think that will happen by an isubstantial
increase in earnings, not a drop in stock price. Patients will be
rewarded with this stock.
Later,
Jim |
