(ADSK) The puzzle:-
A company who has not been able to grow its earnings more than 2% for the last 10 years
when bought at $30. Somehow its worth $51 using DCF and P/E according to S&P analyst.
For $30 to grow into $51 in next 10 years will need an annual growth rate of about 6%. At 2% it will grow to $36. How can a company which can grow its earnings 2% multiply the shareholder's equity by 6%? Maybe money does grow on trees. Well if a greater-fool is willing to pay you $51 for this stock, thats a different story.
Should I call it the folly of the S&P 5-star ratings ? Anyway, by definition it has no value if you are looking to be a long term investor since the 5-star rating is projection only for a year.
(AMT) a sure folly:-
A company who according to S&P analyst is 31X free cash flows. Somehow with positive free cash flows in the last 10 years the company managed to produce negative earnings most of the time :-) Its like $1 comes in and $1 goes out and to produce that $1 outflows of cash the company has to 20cents. Its amusing that this stock trades at $32 and is S&P % star.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment