Go to this link.http://www.gurufocus.com/fair_value_dcf.php?symbol=CYDIn the DCF (Discounted Cash Flow) model do the following:1.) Leave E.P.S. at $3.03. We know that's about a dollar too low.2.) Change the "Growth Rate in the next 10 years" to ZERO! If you need an explanation here...just sell and go away.3.) Change the "Terminal Growth Rate" to ZERO. Combined with the previous step the model will value CYD assuming NO GROWTH...forever!4.) Leave the "Book Value" at $18.70. That's also too low since we know that they earned well over another dollar in the 4th quarter.5.) Look at the "Fair Value" using a 12% Discount Rate.6.) Think about that.7.) Change the Discount Rate to 70%...and check again.8.) Think about that!Gee whiz.
The "Deficient Market Reality" beats the "Efficient Market Hypothesis" darn near every time.
Jaarc,It is crazy indeed. Added to my position at 26.10.Long, strong and patient!
Patience is a virtue...or so I am told.I remember you. Never did get your email.You have the first 5 letters down in your last post...just add an "@rocketmail.com" to it.;)
Summary:In order to get the model to come up with the market price we have to assume...1.) EPS that are too low.2.) No growth...ever.3.) a book value that is too low.4.) a discount rate of 70%!Is any of the above reasonable?Buy the Dips!
I came up with something that said $ 75If I wake up some morning and it happens I'd probably have a heart attack and not be able to enjoy it....lol
jaarc,It is ridiculous,plain and simple. If CYD were a US company followed by a number of analysts, it would have trading in 50s. CYD will grow its revenue between 20% and 30% for the next 5 years. Earnings growth should be around the same pace. Buy the dips ...