Amir,
RE: "I really don't see enough evidence to chalange the 50% growth rate for Cascade."
If you look at the data I posted at the "Networker...BLOOD" thread you will find that 50% (forward) growth is not in the concensus earning estimates. The following example explains why I emphasize "forward". Consider the following EPS numbers from Q1 96 to Q4 97: $.10, $.20, $.30, $.40, $.40, $.40, $.40, $.40. The EPS for 96 is $1.00 and for 97, $1.60. The growth rate is 60%. Unfortunately, in Q1 97 (now) the growth rate is 0!!!
Now, you might argue that the analysts don't know anything and that their earnings estimates are meaningless. I only agree with the first half. Earnings estimates are only as good as the guidance given to analysts by company management.
In my valuation of CSCC, I indicated that it was undervalued at 25 based on current estimates of industry and CSCC's growth rate. I have no problem with anyone buying CSCC here, but I don't like the comparison with LSI and the handwaving about "...ISP...continue to invest in infrastructure at a growing rate...". LSI was affected by a cyclical industry slowdown and it was certain that business was going to improve. There will be continued growth in investment by ISPs, but the significant point is will the growth rate be 30% or 50%?
RE "I think CSCC is a good but not a great buy at current levels."
I agree, but "good" today doesn't mean anything like it meant last summer. Expectations are tempered and more reasonable, now.
Cary |
