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Cory,

I think valuation is a difficult issue for most of us. A lot of it depends on the valuation approach one is using. There are numerous ways to value a stock. For example, one could use absolute valuation metrics (ie, low forward PE, Price/CF, Price/BV), valuation metrics relative to a benchmark (ie, forward PE below the S&P 500 or industry), discounted cash flow, dividend discount, etc.

I know that Hewitt uses mulitple valuation methods to decide whether a stock is attractively priced. I also try to look at valuation from several different angles.

It is important to note that two analysts using the same model can come up with different intrinsic values for the same stock. For example, I believe Morningstar analysts use a discounted cash flow model. The results of the model (ie, intrinsic value) depend on the assumptions used for growth rates, cost of capital, profit margins, etc. If one analysts believes company X will grow 5%/year for the next 10 years, while the other analysts uses a 7% growth rate, the instinsic values will differ quite a bit.

To sum up, two analysts could have different opinions on the attractiveness of a stock's price due to the valuation method being used and the inputs into the model (among other reasons).

By the way, if you are looking for a straight-forward discounted cash flow model, try www.valuepro.com.

Hope that helps.
Matt
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