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Technology Stocks : FSII - The Worst is Over? -- Ignore unavailable to you. Want to Upgrade?

To: Donald Wennerstrom who wrote (1597)	11/15/1997 10:08:00 PM
From: Donald Wennerstrom	Read Replies (1) \| Respond to of 2754

Taking the same 37 stocks that I have been reporting on in the recent posts, another comparison can be made. This one has to do with "outyear" earnings. In other words, Zacks for most stocks gives earnings data for the present fiscal year and the following year. By summing up all the stocks that have an estimate given for the outyear, an average outyear PE ratio can be computed. This can be shown as well as the sum of the closing prices and a comparison made. The table is shown below: ZACKS OUTYEAR CLOSING SUM EARNINGS PRICE CLOSING ESTIMATE DATE PRICES AVERAGE 06/06/97 859 16.8 06/13/97 824 16.1 06/20/97 857 16.6 06/27/97 873 16.2 07/04/97 918 17.2 07/11/97 986 18.5 07/18/97 1035 19.5 07/25/97 1073 20.4 08/01/97 1090 20.5 08/08/97 1115 20.7 08/15/97 1125 20.8 08/22/97 1235 22.8 08/29/97 1239 21.2 09/05/97 1268 21.8 09/12/97 1262 23.5 09/19/97 1271 21.3 09/26/97 1252 20.8 10/03/97 1258 21.2 10/10/97 1256 20.3 10/17/97 1076 17.1 10/24/97 936 15.6 10/31/97 889 14.8 11/07/97 914 15.2 11/14/97 865 14.4 While the 2 columns tend to correlate as expected, there is an underlying difference. On June 6, the sum of the closing prices is 859, while on Nov 14 the sum is 865, essentially the same but slightly higher. For the same 2 dates, the average earnings estimate is 16.8 and 14.4 respectively. That is a substantial difference in percentage terms of -14 percent. This has to reflect higher earnings estimates now for the outyear compared to early June. If the data is accurate, it could mean the recent decline may be coming to an end.