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Avid Technology, Inc. Message Board

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  • imaneditdude imaneditdude Jan 5, 2003 1:44 PM Flag

    PE 2320 nice.......

    Its been going up in antisipation of Q4 results. They will be annouced at the end of the Month and that will tell the story for the next couple of Months. With NAB just around the corner, Avid (and all the other bcst market stocks ) ALWAYS climbs in antisipation of new product roll-outs at the show . Go back and look over the last 10 years it is actually quite amazing. The period between Jan and March Avid has consistently gone up between 15% and 35% or more EVeRY year. Those who are holding now can expect a nice run if Q4 looks good.

    Go look at the stock price in Jan and then April and you will see what I mean. We are in a great position (longs) today.

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    • sorry, I should have added "after a good Q4 annoucement". Thats what I was talking about in the note but after reading it I realized I left it out.

      • 1 Reply to imaneditdude
      • As most of you know, the reason Yahoo shows Avid's PE to be 2320 is because over the last 4 qtrs, Avid made $0.01 per share.

        This is sort of freakish, because: (a) Avid doesn't report their financials on a Sept-Sept basis, so it's not a real reporting period, and (b) there's sort of a "divide-by-zero" problem that makes these superficial ratios look crazy, particularly in TURNAROUND situations (transitioning from losses to profits - as with Avid).

        Of course, all serious investors look FORWARD when calculating PE.

        The analysts consensus for 2003 earnings is $0.56 per share.

        At $23 per share, Avid's forward-looking PE is about 41.

        This is on the high side, but certainly not unreasonable since Avid is in an INFLECTION POINT - analysts seem to expect significant increases in both revenue growth, profitability, and EPS growth.

        In fact, if you compare the $0.09 expected for 2002 with the $0.56 expected for 2003, that's (wow) 522% EPS growth!

        Translating this to PE/Growth, 41 divided by 522 is 0.08 - an amazingly low PE/G.

        Also noteworthy is Avid's Price/Sales ratio. Avid now trades at 1.4x next year's revenue estimate. Many many industry-leading, sowtware-intensive companies trade at MUCH higher revenue multiples.

        For example: PCLE trades @ 2.5x next year's revenue, ADSK @ 1.9X and ADBE @ 4.8X. Wow.

        I assume Sugarr has finally, belatedly done his math, sees these NUMBERS, and that explains why he's been a little more mellow lately.

        Best of luck to all longs!


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