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Three-Five Systems, Inc. (TFS) Message Board

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  • The business will growth about 20% according to the company. At current price we still have a forward PE ~50. This is way too for a 20% boomer..

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    • Year-on-year growth for 2000 is 100%. Admittedly,
      growth for 2001 is forecast to be 20-30%, but when
      calculating forward PEGs (which is what you are doing by
      equating price to growth), you need to take into account
      at least two years' worth of
      forecasts.

      Anyway, here is how I look at it (Note -- I am going to
      use $0.70 for 2000 and $1.00 for 2001 in these
      calculations. These are both lower than the consensus estimates
      now.):

      Year 2000 Earnings: $0.70 (100% YoY)
      Year 2001
      Earnings: $1.00 (42% YoY)<-- Although TFS says
      20-30%.

      Current P/E based on Y2000 earnings: 46
      Current P/E
      based on Y2001 earnings: 32

      I also think that
      (as AZREMAN has insistantly pointed out) the LCoS
      business has been ignored. I can understand discounted,
      but I think that the analysts have completely ignored
      it, which does neither them nor us any favors. If it
      takes off as expected after the Comdex debut of the
      TFS-driven Samsung HDTV, then LCoS could easily add $0.10 to
      earnings in 2001, bringing growth up to 57% and the
      forward P/E down to 29. (Also, a successful debut may
      also lead to an IPO by Inviso, which is 20% owned by
      TFS.)

      The other factor I think that people are ignoring is
      that TFS has said that sales will double over the next
      12 months based on new design wins. If that truly
      happens, there is no way that TFS will earn only $1.00 in
      2001. Every single new device made would have to be at
      a 50% lower profit in order for this to happen, and
      while TFS has said that they were aggressive about
      getting new low-end display designs, certainly not 100%
      of their new wins were of this nature -- the PDA
      designs, for example, should have among the highest ASPs
      of any product that TFS has sold. In any case,
      top-line growth will be phenomenal.

      I dunno -- we
      are all allowed our own interpretations, but I see no
      way that TFS will not be at $40 soon and $50 by
      year-end -- I'd say $60, but I want to see what happens
      this quarter. If they get any coverage at all during
      Comdex, that alone (in this brave new internet-investing
      world) should be good for a few points. As far as I am
      concerned, I've voted with an additional 6700 shares bought
      since the earnings report came out. That's more than
      double what I have ever put into a single stock before.
      I'll redistribute some of that between $40-$45
      (hopefully!), but I plan on keeping the majority for at least 6
      months or until I get a feeling for what LCoS is going
      to do.

      Best of luck to you.

      • 2 Replies to uetani
      • You are a fresh breath of reason in a sea of chaos. Long TFS. PP

      • I think it is a waste of time reponding to flakes
        like j971 but you did provide good rationale although
        I disagree with your numbers. But what's new we
        always tend to disagree<G>. For what it is worth
        this is the way I see it.

        Let's start with
        passive matrix stuff. The company has already mentioned
        all the new design wins in Cell and other hand helds.
        They indicated that this could be as much as $100 to
        $200 mill in new business.
        We know that MOt is
        gaining market share ( probably not as good as their CC
        numbers but good). So MOt should at least equal this year
        numbers which I would guess to be at least $140 mill. So
        now we have a passive matrix range of $240 mill to
        $340 mill. Lets guess $290 mill. Lets assume further a
        20% gross margin with a 12.4% operating expenses load
        and a 33% income tax rate. Peeling thru the numbers
        we come out at $34 mill after taxes. Say 24 mill
        shares and we have approx. $1.40 per share.

        Now
        lets add some stuff we are getting free*****Micros.
        Say that we are more aggressive than the companies
        $15mill 2001 number but still conservative at $30 mill. I
        say conservative because of the following
        facts.
        Their partner INFS with it's acquisition of Proxima has
        at least 70% of the market for A/V projectors. This
        market according to some researchers will reach 900,000
        units next year. That means INFS share equals 630,000.
        Now if TFS could get 10% of this business and NOTHING
        ELSE. No Samsung no Nikkon no nothing. They would have
        sales alone of about $31 mill if one assumes $500 per
        unit. If you do all the math this comes to another $.50
        per share.

        So you see eutani my "conservative"
        numbers come to about $1.90 per share. All though all my
        numbers are very hypothetical I betcha I'm closer than
        you. I betcha, betcha ,betcha.

        Note I am not
        responding to that dork. I have no idea what the stock price
        will be or should be. All I say is that the projected
        growth he spouted has no basis in fact. Und ve vill be
        richtig or ve take zee hostages. Vehrstan
        sie?

        Calvin
        DISCLAIMER: Note I could be full of schisen and be very
        unrichtig.

    • look at the long term price trend which correlate to biz growth. If additional competition come in the market, we might even hit low $20 ..

 

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