First of all, thanks to everyone for the info on the GTE plant acquisition. I agree that if this deal leads to addtional printing of GTE directories for DNY it could be a positive move. We shall see.
With respect to PE ratios, there are different ways to look at them. You could look at the PE based upon the last four quarters or you could look at the PE based upon future estimated earnings. Generaly, the market tends to look at future estimated earnings to determine stock prices. DNY stock has normally sold at a price of about 18 times estimated earnings. If DNY earns $1.95 a share this year the $41.00 stock price reflects a future PE of 21. Since the market tends to look further into the future, if DNY earns $2.20 a share in 1999 a $41.00 stock price reflects a future PE of about 18. If Davis is able to keep earnings on track with analysts estimates, ie about 12% growth a year, you may see slow but steady stock price appreciation. If earnings slip or are not what investors expect, DNY stock will drop or stall and the PE will be adjusted.
Obviously the P/E changed in the last few days when the 3rd qtr "98 number replaced the '97 number with a positive benefit.Also. some people will factor in all earnings whereas others will exclude unusual or nonrecurring gains/losses such as the sale of assets like Metromail since they cannot be sold again in the future. Bottom line is that one cannot go solely by a number without checking a little deeper into what the underlyingfactors are. Sometimes referred by some people as the quality of earnings. I guess that means a buck is not always a buck!Woody912