Dave: You are Exactly Right
Been busy the last few days, but did hear the conf call replay on Monday. Catching up with this thread since Sunday proved impossible given the volume of posts, but I agree, and have posted before, that there are way too many "Emotional" S3 longs here (What would Peter Lynch say about that Frank???)
Irrational statements like "S3 is way undervalued" or S3 will definetly be $30 in 97" or "S3 will definetly go up tommorow" with no analysis to back this up are "Emotional" statements.
Yes, C. Carlos is right, EPS (both trailing and anticipated future EPS) DOES matter. And there is no reason to expect Wall Street to start to value this Company way ahead of TRID, CHPS, or INTC for that matter. The "Value Equation" I use for S3 is as follows:
S3 stock
Price = (20 * Trailing EPS) * (anticipated growth) *(anticipated risk of that growth) * (Market "wildcard" factors)
Using this equation and ignoring the growth/risk/wildcards
S3 = 20 * .94 = $18.5
If you believe that S3 will have EPS growth of ~ 35% (97 consensus 1.30) and there is no risk in that growth(foolish) the stock would be valued at
S3 = 18.5 * 1.35 = $25
If however, you believe that a company completely dependent on two products for $465 million in revenue (even an excellent market leader like S3) MAY have some risk in achieving that future EPS than you need to multiply by some "Risk Factor"
Obviously that risk factor continues to plague the stock and the stock will go up only when it mitigates or as the EPS truly does roll foward at the higher level.
The "market wild card factors" are always in play in the daily and longer term movements of this or any share.
While I am a believer in some MM manipulation especially around options expiration, this in no way explains the stocks movement on high volume days, far away from options dates.
In the meantime, it appears money can be made by playing the S3 trading range of $16 - $19 using any combination of long, short and option plays until it decides to breakout.
In the end, just keep telling yourself "It's only a Stock". Save your emotions for the important things in life. |
