To: Jenna who wrote (22818 ) 1/23/1999 1:32:00 PM From: Jenna Read Replies (1) | Respond to
Assigning a value to high multiple internet stocks How much is a company worth if you sell it piece by piece. Internetstocks.com contains a "valuation calculator." Fill in the blanks and the software determines what a company might be worth if sold:Price to Sales ratio : Instead of earnings focus on sales.. How much have they grown over the years? Amazon.com reported sales of more than $200 so far this year. Given its 838 percent growth rate, the stock might not be such a bad buy, even if it does have a price-sales ratio of 16. For help predicting a company's future sales, visit the Motley Fool site. It charts sales growth over a four-year period and includes revenue reports from the current year. After you enter the ticker symbol, click on financials.Discounted future prices: Let's suppose analysts predict Intuit will grow 20 percent annually over the next several years. Earnings are currently estimated at $1.21 per share. Compound that amount by 20 percent annually…Result: By 2004, Intuit should earn about $3.12 per share. Now multiply that figure by 32 (the current Street multiple). By that reckoning, Intuit should sell for just under $100 per share by 2004, Not bad. Using a more conservative multiple say, 22 times earnings the price comes out to around $69 per share.. not bad. Coincidentally, Intuit's own site, Quicken.com gives future earnings estimates for most listed stocks. Shares outstanding: Before you put your money down, pay close attetnion to the way a company's management has financed growth in the past. Some companies follow up their initial IPO with yet another offering, thereby diluting shareholder equity. The stock gets hammered as a result.10 killer web based strategies that help cut the risk..
