I've been following this one since youfirst mentioned it. I like the businessitself especially since anyone can understand it and since they seem to dowell during recessions.Here's my back of the envelope (whichmay be too conservative):- Current cyclically-adjusted EPS: $1.80 to$1.85 (thus, I feel current EPS are abovetrend).- 8-Year forward EPS growth rate: 14%(They've done 16%/yr the last ten.Consensus has 17.3% EPS growth next fiveyear and VL has 18.5%..but analystsalways seem too optimistic.)- Results in end 2020 EPS of $5.21.- Apply conservative multiple of 14.6x(historical P/E is more like 17...butI believe we're still in a period ofP/E compression that may or may not last until 2020.)- Gives a target range of $75 to $80and an annual return of 8% to 9.5%.This should out-perform the S & Pnicely over this time-frame. However,I think there might be better risk/rewards out there currently.- A target buy range of $25 to $32would yield a very attractive 12% to15% annual return under the above scenario and provide an increasedmargin of safety.Whaddya think Jim?Thanks,John
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