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To: TREND1 who wrote (129851)5/29/1999 6:06:00 PM
From: Ian@SI  Respond to of 176387
 
Larry,

When the discount rate was 12%, then fair value could be determined with your equation.

With the current discount rate, one has to use a multiple of at least twice the growth rate. For leaders in a sector, one should really use 3 or 4. LOL and TIC.

Ian.

Fair pe for a 40+% grower is 80.

Why do you use 2 times ?



To: TREND1 who wrote (129851)5/30/1999 7:31:00 AM
From: Stonehenge  Respond to of 176387
 
Hi Larry. Only using 2x in relationship to the high pe's given to 8-10% growers these days i.e. coke, gilette etc. Dell ought to enjoy a premium to other "growth" companies.


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