Jules,
In the conference call I heard that PTEC will have 18% operating margins by year end.
Let's assume that their revenues are flat for 2000 at $125,000,000. 18% of $125,000,000 is $22,500,000. Add $2,500,000 for interest income and we get $25,000,000. If they are in the 30% tax bracket they are left with $17,500,000. There are 26,600,000 shares outstanding. If PTEC buy's back 10% or 2,660,000 shares that leaves 23,940,000 shares. That will leave us with .73 cents a share.
If PTEC grows revenue next year by 10% their revenues are $137,500,000. 18% is $24,750,000. Add $2,500,000 for interest and we get $27,250,000. less 30% for tax and we get $19,075,000, or 80 cents a share.
At 80 cents a share and a 25 PE we get a target of $20.00 a share, or with some momentum we will get a 30 PE and $24.00 a share.
Are my calculations and assumptions correct and is this a reasonable target. What is your target and how do you arrive at your figures?
jd |
