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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Sun Tzu who wrote (2319)3/19/2002 9:14:39 PM
From: Crossy  Read Replies (1) | Respond to of 95531
 
SunTzu,
interesing approach that you submitted - I do like the underlying idea. Just one assertion: instead of operating margins I would use gross margins instead. Reason: SG&A as R&D are costs subject to management discretion - they can be planned, guided and "managed". moreover both tend to diminish relatively with sales volume, so their effect in a growth scenario should diminish as revenue grows over time..

best rgrds
CROSSY



To: Sun Tzu who wrote (2319)3/20/2002 8:07:41 AM
From: Bill Cotter  Read Replies (1) | Respond to of 95531
 
Hi Sun; Re your valuation model, will it work for individual stocks? I tried it on a fairly stable stock (non-cyclical) Proctor and Gamble (PG) and made some assumptions but I am not sure about the number I am getting.
Operating margin 13%
Sales Growth 10%
Price/Sales ratio 3

(.13 * .10) / 3 = .00433

I guess it is only effective if you chart it over time and in relation to other stocks in a similar group.


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