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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: Tlac who wrote (2086)	5/22/1999 12:13:00 AM
From: Mike Buckley	Read Replies (3) of 54805

Kelly, Glad to see another valuation junkie. Using a revenue growth rate of 35%, and a current earnings growth rate of ~55% (which gets us from the current run rate in earnings of $1.20/sh to ~$1.86/sh), Run rate's definition as I understand it is four times the most recent quarterly earnings. Using the pro forma earnings of $1.20, that would make the run rate $4.80. Not trying to be nit picky, but want to make sure we're on the same page. and even assuming an abruptly attenuated revenue growth rate to 35%/yr... and assuming a PEG ratio expansion from the current .77 to only one of 1.91 (in five years), one concludes that the share price is likely to reach at least $2.15 within two years. You lost me there on two points. First, you mention a PEG of 1.91 in five years. How do you conclude anything from that about the earnings in only two years? Second, I'm sure you don't think the share price will be $2.15. Do you think that will be the quarterly EPS in two years? If so, I'd appreciate it if you could hold my hand by taking me through the calculations. --Mike Buckley

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