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

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To: Reginald Middleton who wrote (30)	1/27/1997 10:52:00 PM
From: cape radical	of 102

i checked out your site and it is very cool. congratulations on a job well done! i will next take a look at the software. you make a very good point about MSFT and its cash pile. this money is not being used productively and would benefit the shareholders more if it were in their hands, i.e., who knows best how to diversify and invest stockpiled cash? i wanted to share a couple of numbers i calculated based on the latest condensed financials from CUBE and ESST. CUBE: EPS (standard) -2.15; EPS (adjusted) 2.40; ROIC 18% price $37; PE (adj) 15 ESST: EPS (std) 0.52; EPS (adj) 1.48; ROIC 36% !!! price $30; PE (adj) 20 does the market take note? ESST has been climbing and has a price/sales of 5.5. CUBE has stabilized with a price/sales of 3.9. ESST is creating wealth for its shareholders and investing its capital wisely (thus far). CUBE is not sufficiently rewarding its investors. smart investors realize this and have afforded ESST a higher adjusted PE. in my opinion, ESST has an open upside. CUBE may continue to grow its revenue at a phenomenal rate, but until it increases its ROIC, its price will probably dither.

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