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  • GenJackripper GenJackripper Feb 7, 2004 6:58 PM Flag

    Continued improvement in EPS CAGR

    The research analysts giveth and the research analysts taketh away.

    While the consensus opinion as to future estimated EPS for SIVB for the next couple of years has been lowered in the aftermath of the company's 1/29/04 report of 4Q03 & FY03 earnings (5.6% for FY04 & 15.0% for FY05), they've continued to increase their 5-year forward-looking consensus for SIVB's EPS CAGR, this time, a respectable 18.64% (from 11.8% to 14.0%).

    That's the highest they've accorded it in almost 21 months, as the following updated table from message #1922 (hyperlinked at the bottom) shows:

    05/10/02: 15.0/10.87
    07/19/02: 13.5/10.71
    08/16/02: 12.0/10.70
    09/20/02: 13.5/10.70
    10/25/02: 12.0/10.64
    06/20/03: 10.0/10.39
    09/05/03: 11.6/10.34
    12/19/03: 11.8/10.22
    02/06/04: 14.0/10.18

    Lowering the base year (FY04) -5.59% and FY05 -14.98% should elevate the 5-year forward-looking CAGR somewhat, ASSUMING that the end point 5 years hence is maintained, but not enough to justify, as the math bears out, an 18.64% compounded increase in its CAGR to 14.0%.

    To illustrate the point, let's project the previous consensus EPS for FY04 of $1.61 out 5 years @ its previous CAGR of 11.8%. Here's what it calcs to:

    FY04: $1.61
    FY05: $1.80
    FY06: $2.01
    FY07: $2.25
    FY08: $2.52
    FY09: $2.81

    If we now lower FY04 to $1.52, to end up @ the same FY09 EPS of $2.81, the CAGR that would accomplish it would be 13.09%, NOT 14.0%.

    Projecting FY04's current consensus of $1.52 out 5 years @ a CAGR of 14.0% would yield as follows:

    FY04: $1.52
    FY05: $1.73
    FY06: $1.98
    FY07: $2.25
    FY08: $2.57
    FY09: $2.93

    So we now end up with $2.93 versus $2.81. Why? What's caused this upward revision? Is it expectations for the economy and the health and technology sectors that the company specializes in? Could it be that the analysts have begun to factor in rising interest rates (which is beneficial to this bank's bottom line)? Or could it be a combination of both factors?

131.24-0.66(-0.50%)Nov 27 1:00 PMEST