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AT&T, Inc. Message Board

  • friendly_jacek friendly_jacek May 6, 2002 2:27 PM Flag

    Question on PE

    I posted this question couple of days ago. Nobody answered, so it is a second try.
    This is the data I researched:
    Current Qtrs. Est. $0.04
    Current Yrs. Est. $0.15
    PE on CY Est. 72.47
    Next Fisc. Yrs. Est. $0.15
    PE on Next FY 94.32
    Last Qtrs Earnings $0.06
    Year-Ago Earnings $0.19

    PE of 72-94 sounds high in todays value-oriented market.
    So my question is how this valuation can be sustained long term.
    Thanks.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • >>Why couldn't that "4 bucks" drop to nothin?<<

      i never said it couldn't.

      >>So what is going to happen to make the earnings of the Business, Consumer and BB operations double in order to get somewhere near a reasonable PE? Seems more likely the price of the stock...in whatever form...will continue down until it gets to that point.<<

      (i don't know why you're including bb in there, becauses you know what's going to happen to that).

      what i have - consistently - been saying is that i don't think t is going to last long enough to get to the scenario that you're describing.

      you've seen the talks about a possible tracker & subsequent distribution of consumer, and the talk about business being taken over by some baby bell.

      so based on my (hopeful, perhaps) scenario, i'll repeat my question:

      how much do you expect that remaining 4 bucks worth of value on its own to drop?

      and i'll also repeat my contention that, based on my scenario, the P/E doesn't mean a thing.

    • >>>how much do you expect that remaining 4 bucks worth of value on its own to drop?

      Why couldn't that "4 bucks" drop to nothin? What remains of T after BB might only be worth the debt...i.e., it can earn only enough pay interest; nothing left for equity holders. From T's own segment reporting they showed EBIT excluding all the costs related to past deal making mistakes at $1.3B. Less interest and an estimate of taxes leaves about $300MM. Annualize that at four times and you get a PE of 35...that's absolute best case...as if everything goes right and there were not going to be any futher revenue declines...which we know won't be the case. So what is going to happen to make the earnings of the Business, Consumer and BB operations double in order to get somewhere near a reasonable PE? Seems more likely the price of the stock...in whatever form...will continue down until it gets to that point.

    • damn jacek, i hope you haven't decided to short t because of anything i've said.

      but if you ARE gonna short t, let me ask you this:

      considering that t's price is backed up by at least .34 of cmcsk's price (today @ 28.64a, it means that t has built into it a base of around 9.75.

      at t''s today's price of 13.75 (for even numbers sake) that leaves you with 4 bucks to play with on your short.

      how much do you expect cmcsk to drop in order to reduce that built-in base for t?

      how much do you expect that remaining 4 bucks worth of value on its own to drop?

      is it worth the gamble?

    • Everyone makes mistakes. Don't worry, that's how you learn.

      hahahahahhahahhahahahaahahahahhahahahahahahahahahahahahahaha

      Did you buy athm, too ??????

      hahahahahhahahaahhahahahahhaahhahahaahahhahahahaahhahahahaahahhahahahahahahha

    • PEBLE and mwood1149,
      Thanks, I decided for myself that one is better off shorting than buying this stock. At least for now.

    • Why...its perfectly clear from the company's first quarter earnings release. Ya just have to "normalize" this and "exclude other" that and it jumps right out atya.

      EBIT exluding other bad stuff $1,304
      Less interest & an estim of tax (980)
      normalized EBIT 324
      annualized normally $1,300
      EPS (normally-ized) .36
      PE 35x

      Isn't that better than 72x ???

    • jacek, at this stage of the game, the p/e means NOTHING.

      the price of t is going to be determined by what happens with the att/cmcstk deal, the proposed tracker & later distribution of the consumer division and finally the possible (likely, i hope) take-over of whatever then remains.

      your stats are correct but, as i said, they mean nothing.

      • 1 Reply to PEBBLEHEAD
      • >>>jacek, at this stage of the game, the p/e means NOTHING.

        "Nothing" was that off-the-cuff answer, Peb...you can do better than that. All those things you mentioned (the deal, the tracker, etc.) should result in a current low PE...i.e., the uncertainty would push the price down relative to earnings. His question was about an apparent too-high PE. Wouldn't the answer be that the market expects future earnings to be higher than they are currently?

    • I will try to help - The PE is meaningless at the
      present time. The split of cable will result in
      obtaining shares in the new cable company that
      are worth $10+ at the current market rates.

      The rest of AT&T (Business Services and Consumer
      are worth more than $4. This makes the stock
      worth at least $14 at this time regardless of
      the PE.

      It is great that you gathered all the information
      but it doean't mean much.

 
T
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