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Technology Stocks : Equinox Systems (EQNX) -- Ignore unavailable to you. Want to Upgrade?

To: Scott H. Davis who wrote (388)	4/18/1998 9:43:00 PM
From: HeyRainier	Respond to of 765

Equinox again beats earnings estimates. I think given the circumstances, it would be appropriate to raise the sustainable growth rate to about 25% for the company, which at the current TTM earnings would bring this to $30.25 as a fair value. Note that EQNX doesn't often exceed its fair value, which can leave upside potential for the issue. Just look at any number of growth issues that trade far above their projected sustainable growth rates. I'm always somewhat hesitant to expand fair valuation ratios, but EQNX's pleasing performance leaves me little choice. It's hard to draw inferences from only a few years of data, but it looks from the earnings trend that EQNX has managed to control the cyclicality of sequentially lower earnings from Q4 to Q1. They deserve points here. Revenues are growing well too, but I often try to keep from assigning a growth multiple that is above top-line growth. We all know that the bottom line can't keep expanding at rates greater than the top line, so a target in between top line and bottom line growth would seem appropriate, and if pressed, I would assign perhaps an earnings multiple of 27 at the maximum. Good job, Equinox. Thank you for the tremendous work you do, and for constantly looking for ways to enhance shareholder value. Regards, Rainier