neog - Neogen's E.Coli Test adopted by Japan Message Board

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Biotech / Medical : neog - Neogen's E.Coli Test adopted by Japan

NEOG 6.050

-3.9%

Nov 4 3:59 PM EST

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To: Scott Ozer who wrote (271)	12/23/1998 1:37:00 AM
From: Kramer	Read Replies (1) of 441

neog's valuation - now that we know neog's tax rates and a good idea about litigation expenses, I'm taking neog's past and estimated earnings and trying to remove litigation expenses and add in taxes and then come up with a reasonable valuation based on price to earnings growth: Past four quarters EPS = $.38 Past four quarters litigation expenses=$.10 Taxes on $.34 for three quarters and litigation expenses=$.12 Adjusted trailing earnings=$.36 Future earnings - I will use Roney's, she seems to be very conservative. Her estimate for next fiscal year (May 2000) is $.50, but she made this estimate in October way before neog told us that litigation expenses in that year are very likely to be 10 cents lower. Also her estimate of $.08 was surprised by 38%. So I will take her estimate and add the 10 cents for litigation expenses and add, to be conservative, another 20% of her original estimate for her being surprised = 10 cents. Total=$.70 Alright let's get out the PEGulator and plug some numbers in: fool.com .70 for forward estimates .36 for trailing earnings 6 for the number of quarters the forward estimate is out 7 for the current price of neog And the answer is .34!!!!!!!!!! Yep neog is still undervalued. Try plugging in $15 instead and the PEG = .74!! Right smack in the middle of fairly valued. You might notice if we used Roney's original estimated numbers we would be at $.33 cents with trailing earnings and with their forward estimate of $.50 we would be at a PEG=1.1 with a price of $12, which just happens to be their target price from back in October. Hmmmm! Not that we need to validate the legitimacy of using the PEG, its reputation is already well known. Gee if we run our PEG up to 1 like their target does we would have to put our target at $20. Wow! Does that sound good!! I hoping those Dart's are running out of shares some time soon. We should have been pushing over $9 without them. Oh well, we will get there after we get rid of their influence.

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