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Staples, Inc. Message Board

  • stocks999_2000 stocks999_2000 Jul 14, 2000 2:07 PM Flag

    more Amy Domini on SPLS

    Amy Domini, Domini Social Equity Fund, discussed
    stock picks today on
    CNBC.
    http://www.netale.net/cgi-bin/mb.cgi?stocks+963600500
    Picked it again. If Internet payoff works out, growth
    should go up again considerably

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    • Atltu,

      When I do a valuation on a company,
      I'm usually very conservative. If an investor is
      comfortable with the potential return using conservative
      numbers then it provides a margin of safety. Furthermore,
      if things go better than expected, the annual return
      is pleasantly higher for the investor.

      Many
      analysts think the long-term growth rate of SPLS is about
      25%. Valueline seems to think it's 25%, yet it's
      latest valuation was on April 21st. Merrill Lynch, who
      recently downgraded SPLS, thinks that the growth rate is
      between 22-30%.

      For my estimates, I used a growth
      rate of only 20%, assumed a period of 5 years and put
      the average P/E over those 5 years at 20.

      N =
      5
      P/E = 20
      % = 20
      99 EPS = .67

      .67 in 5
      years is 1.66
      1.66 x 20 (p/e) = $33.34
      target

      Discounting back to present value, at a price of $15.50 for
      SPLS, you can get a 16.5% annual return.

      So, if
      things go below expectations for SPLS you're still
      earning a 16.5% annual return. However, if SPLS grows
      earnings at 25% within those 5 years and it's P/E is 25
      within that period, then your return would be 26%
      annually at a price of $15.50. In this scenario, the
      target price would be $51 in 5 years.

      So as an
      investor, I think it's realistic to assume that your annual
      return will run between 16-26% within those 5 years with
      the price target ranging from $33 to $51 depending on
      events. However, if SPLS is able to grow earnings above
      25%, your return is even more generous.

      Events
      that have lowered EPS this year are Staples.com losses
      and pricing pressures from ODP and OMX.
      I think
      these are the two key issues going forward and it will
      be interesting to see how it plays out. Based on
      these challenges, my expectations for stock
      appreciation are low for the next 6 months.

      -TF

    • price and time target on SPLS?? I do not own SPLS
      at the moment but have in the past. It was just
      brought to my attention by a stockmarket service. Am
      thinking about buying tomorrow. You seem pretty up to date
      on investing and on SPLS. A reply would be
      appreciated. Thanks

    • when earnings come out - or are they out
      already ?

 
SPLS
16.03-0.410(-2.49%)Apr 17 4:00 PMEDT