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DHB Industries, Inc. (DHB) Message Board

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  • saprophytic1 saprophytic1 May 26, 2003 12:05 AM Flag

    Alleyba says..........

    You are absolutely right!

    I�ve read a few tomes (zzzzz) through the years, but that�s about it.

    In general, I�ve learned to take more of a statistical approach. I think that statistics neither lie nor tell the whole truth. But statistics might give hints to things that initially aren�t all that obvious. What I observed before was that DHB had the lowest price, but one of the highest P/books (primarily because the book value is so low). It stands out, and I think that if it wants to run with the champs that first it should try to look like a champ. Since if the price goes higher, it will only make the statistic look worse- the best way would be to decrease the ratio by increasing the book value. I suppose that is a complicated way of saying that I hope that they decrease their debt somewhat in the future. Nothing wrong with that now, hmm?

    But more to the point of your observations and PEGs and P/book: I look at PE�s and I use Growth estimates but I just don�t use the ratio�and maybe that�s all that needs to be said.

    1. The definition of PEG is, as you know, the stock's P/E ratio divided by the annual growth rate of its COMPANY�S earnings. A P/book ratio Price-book ratio compares a stock's market value to the value of total assets less total liabilities (book value). Determined by dividing current stock price by COMMON STOCKHOLDER equity per share (book value), adjusted for stock splits. I prefer to look at an indicator that keeps me, a common stockholder, in mind. I think more COMMON STOCKHOLDERS should do the same. To me, it�s a direct measurement or how the company is increasing the intrinsic value of the shares.

    2. PEG is a ratio with 3 variables. I�m not sure if adding a third variable says anything that can�t be looked at separately, but I do know it makes it a bit more complicated. I find that understanding ratios become more cryptic the more variables are involved. Being saprophytic, I prefer ratios broken down as simply as possible. Through the years, I have become slightly biased against stocks with high P/E�s irregardless of their growth rates. If a company wants to cook the book values, then it is the same as cooking EPS�but at least it�s on the record for any future SEC investigations.