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Technology Stocks : Cognicase (COGI, T.COG) - Integrated IT Solutions -- Ignore unavailable to you. Want to Upgrade?

To: Sally Gallagher who wrote (97)	3/11/1998 12:41:00 AM
From: BM	Respond to of 843

Sally, investors are buying into future earnings, not past performance so Ben Graham wouldn't be too crazy about this stock. I'm not inclined to do detailed fundamental analyses for stocks of this type personally - if the growth rate exceeds the PE and I have confidence in the business and management, I'm happy. Hopefully someone else can help you with ROEs etc.

To: Sally Gallagher who wrote (97)	3/11/1998 10:10:00 AM
From: md	Read Replies (1) \| Respond to of 843

Sally the reason for the declining ROE is the number of financings which the Company has undertaken over the last year. Last March they did a private placement of warrants for US$8.7 MM and then the IPO in October. This has inflated the Book Value of the Equity which you are using in your calculations and depressing your ROE figures. When looking at the numbers you should take into consideration what the future ROE looks like over the next 2-3 years. Going forward with some estimates ROE for fiscal 1998 would be 12.7% and 24.3% for fiscal 1999. These estimates would include what could be expected from the recent Hexagon and SHL acquisitions. If more acquisitions are consumated then a higher ROE could be expected. You have to give the company time to make acquisitions and utilize the proceeds from it's financing activities.