Wow Jach, you're quite the generous investor, willing to pay a
premium above the highest growth rate for Fore. And this on
top of your already generous 25% increase in current consensus
earnings estimates for 1999. BTW, how does "doubling its work force"
equate to a 25% increase in earnings in the first year? The only
thing you know with reasonable certainty with that is that employee
expenses will approximately double.
A forward pe of 41 - 54 ($30/.73 - $40/.73) is hardily "conservative".
That's banking on some serious growth. Maybe Fore can deliver it. I
sincerely hope so.
Another thing, for a pe to really "hold", the growth rate usually has
to be sustained. So, let's look at what "sustained" growth rates
yield for Fore earnings (with and w/o your 25% gift for 1999):
w/o 25% w/ 25%
30% 40% 30% 40%
1999 - 0.73 0.73 0.91 0.91
2000 - 0.95 1.02 1.18 1.27
2001 - 1.23 1.43 1.54 1.78
2002 - 1.60 2.00 2.00 2.50
2003 - 2.08 2.80 2.60 3.50
Given that Fore has earned about $1.32 in the last 4 years combined,
these are some impressive numbers indeed:
stockmaster.com
If you really believe that this will happen, then you are absolutely
correct that Fore is at least a $30 stock. However, not now though.
Even if the above earnings come to fruition, it will take some time
for Fore share price to get there.
Good luck,
John Dodson |
