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Strategies & Market Trends : DISsing DISney -- Ignore unavailable to you. Want to Upgrade?

To: REACTOR who wrote (48)	2/17/1998 10:07:00 PM
From: capitalistbeatnik	Read Replies (2) \| Respond to of 136

If you think that a company with this growth rate will go up 20-25 percent a year long term, let's do a little math. Current PE is about 38-39. Growth about 17 percent. So if it goes up .25 a year for the next 20 years the price will be 9714, an 87 fold increase. Earnings will be in 20 years 23 times what they are now assuming current rate of growth (which is very unlikely for a mature company). The PE will then be a whopping 143. A more realistic long term growth rate for a mature co. like this is 10 percent. This would lead to a 6.7 fold increase in earnings. If you're prediction of 25 percent a year comes true, then the company would be trading at a P/E of 493!! So far I've been wrong about the short term trend in the price of this stock, but there is simply no way that you can expect to grow the stock price as you think over the long haul. Despite what the DIS cheerleaders and wanna be lawyers who post in this forum might want you to think, earnings do eventually matter. To think otherwise is just fundamentally implausable. But a tech company like CSCO just might do what you want. JOB