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Strategies & Market Trends : Professional Equity Analysis - the Pursuit of True Value

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To: Curly Q who wrote (9)	1/27/1997 10:39:00 AM
From: Reginald Middleton	of 102

Thomas, here are the figures you were inquiring about. After a few more companies valued using traditional methods, I will go into the prospective buyout candidates using Discounted cash flow analysis and pure Economic Value Added (EVA). You will probably be surprised as to who I pick and how the scenarios turn out. Unfortunately, somebody has complained about my posting of the model's results on various threads, so unless you, or anyone explicitly requests an analysis on a particular thread, I will not present it (this is too much work for me to get negative feedback). I don't know enough about CSCC's actual market, but from a numerical point of view, it looks something like this (as of 10:19 AM January 27, 1997): 5 yr. Earnings Growth: 69% Simplified Rate of Value Creation: 12.37% Sustainable Growth: 25.96% Current Quote: 40.63 Cash Flow Valuation: 36.71 PE Valuation: 286.97 PE Valuation Relative to Market: 148.01 Feburary 50 Call Fair Value: $0.63 February 50 Put Fair Value: $4.67 If you notice, the markets have put a very frothy premium on the stock, as compared to its value as a function to its cash flows This is a situation (from a numerical standpoint, that practically mirrors NSCP. The moral to the story is do not follow P/E as a guage to value. I will distribute an updated version of the New Media Financial model with the Cascade valuations (along with updated INTC and MSFT) to every one on the distribution list today. If you are not on it, you will not get the model. to join simply fill out the form at rcmfinancial.com;

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