Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : All About Sun Microsystems -- Ignore unavailable to you. Want to Upgrade?

To: Charles Tutt who wrote (18293)	7/28/1999 10:47:00 PM
From: Charles Tutt	Read Replies (5) \| Respond to of 64865

A headline on Bloomberg.com tonight is "U.S. Companies' 2nd-Qtr Profits Rise 16%, Biggest Gain Since 3rd Qtr '95" and the associated article makes clear that it refers to the S&P 500. The July 19 issue of Barron's (I didn't buy this week's) reports the P/E of the S&P as 36.97. Combining those facts gives a PEG for the S&P of 2.3 +/-. According to Reuters, Sun recently reported quarterly earnings of 48 cents/share, compared to year-earlier results of 37 cents (excluding acquisition related charges). That indicates an earnings growth rate of 29.7%. Applying the S&P PEG of 2.3 to the 29.7% growth rate indicates a P/E of 68.3. Taking TTM earnings (excluding special charges) as 1.42 (from the Value Line) suggests that SUNW would be selling for around 97 if it were being valued like the AVERAGE S&P stock. Thus, I consider SUNW at 70 to be dramatically undervalued relative to the S&P. Comments? That's all JMHO, and not investment advice, mind you!