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Technology Stocks : America On-Line (AOL) -- Ignore unavailable to you. Want to Upgrade?

To: Chuzzlewit who wrote (4001)	1/29/1999 8:32:00 PM
From: Joe E.	Read Replies (1) \| Respond to of 41369

" Straighten me out then. I chose a comparison to DIS because it is a moderate growth stock (not quite mature), trading at a premium to the market." What seemed circular was that you said in your original that it seemed to you that the market was treating the stock as if the company would have earnings of about x in five years and then applied a multiple (Disney's) and then figured out the accretion rate and then said it was too low. How could we expect the market to apply a Disneylike 40x trailing earnings p/e to a stock that had just grown earnings at over 100% for five years?? Disneys earnings have grown at a rate of 13.6% per year for the last 4 years (too much trouble to find that fifth year, sorry), per zacks www1.zacks.com But DIS has a P/E of 41. So, that is what seemed circular, picking a too-low P/E for the growth rate and then saying that it suggests a very high earnings level is required. I am not suggesting I know better than you what AOL's future earnings will be, just that the logic of your statement, given the way the stock market values fast growing stocks, is incorrect. Perhaps I should have just said I think your p/e is inconsistent with your growth rate.