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Non-Tech : Radica Games (RADA) -- Ignore unavailable to you. Want to Upgrade?

To: Hank who wrote (6525)	12/18/1998 10:58:00 AM
From: Zirdu	Read Replies (2) \| Respond to of 7111

To those worried that Radica will not grow earnings and revenues in the future: At a price of 14 1/8, and trailing 12 month fully diluted earnings of $2.39 per share, for a current PE of 5.91, Radica would not have to grow earnings at all for this to be an excellent investment. Assume Radica continued to earn $2.39 per share on operations for the next 10 years. That alone would amount to $23.90 per share, not to mention the interest that could be earned on this amount. Or look at it this way: Assume Radica can continue to earn at the rate of $2.39 per share. Assume Radica puts all earnings into stock buybacks. At the current price, how long would it take Radica to buy back ALL of the outstanding stock? Only 5.91 years, assuming the stock price stayed steady at 14 1/8. So, if they do continue to earn around $2.39 for the next 5 years or so, and continue to buy back stock as they have been, the stock price HAS to go up. I am very much in favor of the buyback, by the way. For whatever reason, supply and demand in this stock is out of whack, and there is more supply than demand at, say, $15 per share. This will change if the company continues to use it's cash flow to buy back stock.