I don't have the data to do anything very sophisticated, but taking what you gave me, TLAB has had an average P/E of 33.32 over 5 years. They had an avg. earnings growth rate of 50%, so the historic PEG is roughly .67. Current PEG is around 1.6 (using the earnings estimate of 30% earnings growth in this year and 5 yrs forward). This suggests overvaluation. OTOH, TLAB usually outstrips estimates, so a more realistic view of earnings growth is around 40%+. Also, during the past five years there has been a huge P/E expansion in the whole industry and the S&P, so TLAB's PEG remains well below its peers (Yahoo lists an Industry PEG of greater than 5, and S&P PEG of 4.). If, however, the TLAB growth rate does fall into the 30-40% range, then inevitably the P/E has to contract. I'm comfortable with a forward P/E of 50 (which we're passing right now), but I would tend to believe that you'll see a P/E range of 30-60, which translates into a share price range of $37.5-75 in '99.
Doughboy. |
