I have a question about calculating p/e. I look at the numbers of DRTK and I have the following:price 11 1/4, estimated earnings .56 (FY 98) .83 (FY 99). Estimated growth rate 31.67. Current p/e 32.0.Ok. If I take FY98 earnings estimates and divide that into the price I get 11.25/.56 = 20So my estimated p/e based on next years earnings (estimated) is less than the estimated growth rate of 31-32%. Does this suggest the stock is under valued? Of course, the current p/e of 32 is the same as the growth rate, and this p/e is based on trailing earnings.DRTK seems to be winning contracts right and left. They are getting awards for various aspects of their business. They look great from that point of view. I want to decide if I should hold on to my shares since they have been pretty flat lately.Can someone help me understand my calculations? ThanksDave
If you calculate, based on todays price of $8.5 per share for DRTK and your estimate of '99 earnings is about .83/share, then DRTK is selling at 7.225 x 1999 estmated earnings!! If you add to that the rececntly announced buyback of up to 2 milion shares by the board of directors, I would certainly say that this stock should be $15-20 just based on projected 1999 earnings. It seems that DRTK is grossly undervalued and mostly misunderstood. The recent 40% stock swoon signallled another buying oportunity to purchase at a substantial discount, a masterfully well run company and a company that is in line to haul down additional decommissioning contracts in the near future.
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