On the first chart which shows the stock price and the analysts estimates over a period of two years.
1. volatility is evident and buy and hold is not a real good choice for COMS, so give the man a cigar, one of the most central premises of AIM is in this stock (volatility).
2. Although I see a eps estimate drop in the July thru October timeframe, I now see a nice recovery in the eps trend. It is trending higher. That is good. Seen the Peter Lynch commercials? Stock prices follow earnings over long periods of time. <grin>
On the second chart which shows the p/e range over the same 2 1/2 years.
1. The near term high in the 50's corresponded to a p/e ratio of 27, which is at the high end of the scale. Consequently buying COMS as little as 6 weeks ago would have left you open to the dreaded p/e contraction which is in the process of happening.
2. The current p/e number is more like a normal to low normal valuation level of 17-18. Good but not great. A number like 15 or less on the p/e or $27 3/4 would be a better buying point.
So what do you do with COMS???
Well, the technical side of confirmatory analysis part should have told you to never, ever, ever buy a stock whose price is falling. Consequently, you wait to make the initial purchase of COMS IMO. Waiting also gives you a chance to figure out if the eps increases will be another head fake, or the real thing. If you decide to watch COMS for a buy, your first signal will be a basing pattern followed by a continued increase in eps estimates. If the analysts start to cut the eps, then all bets are off and you go look for another stock.
What I do is to look into the "reasons" for the problem and try to determine if they are "reasonable" and long lasting. If they aren't and the "analysts" haven't factored in something that I see, then I get a bargain. I see a slowdown in some areas of COMS, but nothing as drastic as to justify a 30% haircut in the stock.
----
Dave
PS, remember all p/e are based on forward 12 month earnings estimates here. |
