William Thomas asked: >

Before I share my findings, I’d like to know what judgments you decided to use for your SSG as well as what data you used?

Here, I want to just note that there are substantial differences between the StockCentral/Hemscott and the SDS&P/OPS data files, particularly in terms of the Historical Hi & Lo PEs. For example, TK5’s Alt-M, which eliminates the 5 highest PEs and averages the rest, is 4.0 points lower for Hemscott’s Hi PE (23.7 vs 27.7). On the other hand, Hemscott is 5.4 points higher in terms of its Median Hi PE (38.1 vs 32.7). Still another even larger difference is the 10 year ave Hi PE where Hemscott is a whopping 17.9 points higher (65.4 vs 47.5).

Armin Fields

Bill,

I appreciate your starting this thread. QSII and (I think) CTSH are two companies that seem to break the mold of what we're taught to look for. Actually, maybe they are what we are taught to look for, only better!

I wonder if we can get some guidance by looking at other companies that may be further along in their corporate life spans, but would have looked like these companies if we look back 5 or 10 years. Do you have any examples?

I  must confess that I lean towards these types of stocks for my personal portfolio.

EBAY between 01 and 05 (inclusive) was similar roughly 70% EPS growth (0.03c in '01 to 0.52c in '05). PE was approx 300.

Rajiv

www.stockfundas.com

 

 

 

 

Joe,

I discovered another stock I think fits this group that might be compared with Bershire Hathaway as it is rather pricy. It is Chicago Mercantile Exchange CME. This specialized Investment firm went public in Dec. 2002, and has 38%+ growth over the last five years after a shaky start. It was put into the S&P 550 Index last August and is forecast to continue it's spectacular growth by a host of analyst. The StockCentral data had only the past three years data so I went to MSN Money to get the financial history for a SSG (see attachment). Notice the unusually high rate of expansion of the PE. Just how high can it go???? MSN  has forward P/E at 46.8.

Bill T.

 

 

 

Rajiv,

The object of this discussion centers around whether it is reasonable to use "perferred procedure" for judgement with stocks that exibit extraordinary growth such as the ones I have listed. Do you believe that CME will only have an average high PE of 25+ over the next five years? Or is it more likely to be at least equal to the current PE.

Bill T.

 

 

 

 

 

 

 

 

Rajiv,

I see the pending merger nothing but a plus, plus; even if there is a slight pause in growth until 2008, the return to 40%+ growth by 2010 is greater with the combined companies. If you agree that the possibility of $1284 high price in 2010, then use 25.8 as the ave high PE, but you will then need to project the EPS growth rate at 50%. With ave high PE of 35 requires EPS growth rate of 30%, which is probably the best judgment for the SSG of all, and the "preferred procedure" still the least likely to occur.

Bill T.

 

Bill,

I gotta ask you this. Did you buy this?

Or like I watched increduluosly at it shot up from $500 at time of discussion to $572.

Bill, Your CME got me looking at it. Coincidentally Jim Cramer had talked of the NYX being the #1 stock for 2007. So I started looking at NDAQ as a possibility

As you had mentioned trying to do an SSG on NDAQ with limited data is challenging to say the least. CME and NDAQ are both at a PE of 50. NYX is at a stratospheric PE of 100.

NDAQ seems to be faced with the uncertainity of whether their hostile takeover of the London Stock Exchange will go through or not.

Both NYX and NDAQ have competition. Goldman Sachs, Citi and a number of other financial power houses are banding together to form an alternative exchange to open for business in 2008.

Following are the fundamentals from Fidelity research. CME seems to have better fundamentals. Better margins, much lower debt.

Rajiv





 

 

 



Company Name
NASDAQ STOCK MARKET, INC. (THE)
CHICAGO MER EXC A

 

 

 



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# Employees

917

1,321

 

 

 




Price Performance (Last 4 wk)
1.2%
10.1%

 

 

 




Price Performance (Last 3 months)
-4.6%
17.8%

 

 

 




Price Performance (Last 52 wk)
-8.6%
53.3%

 

 

 




Beta

0.7

1.5

 

 

 




Earnings/Dividends




Current Quarter Consensus Earnings Estimate

0.24

2.96

 

 

 




Dividend (Most Recent Quarter)

N/A

0.63

 

 

 




Dividend (Trailing 4 Quarters)

N/A

2.52

 

 

 




Dividend Yield (Last 4 Quarters)

N/A

0.00%

 

 

 




Dividend Ex-Date



12/06/06

 

 

 




Dividend Growth Rate (1-year Average)

N/A

78.07%

 

 

 




Dividend Growth Rate (5-year Average)

N/A

N/A

 

 

 




Payout Ratio (Last 4 Quarters)

N/A

21.38

 

 

 




Valuation




P/E (Last 4 Quarters)

52.38

53.16

 

 

 




P/E (Most Recent Quarter)

39.28

48.93

 

 

 




P/E (5-year Average)

N/A

30.78

 

 

 




Price/Cash Flow (Last 4 Quarters)

21.24

44.32

 

 

 




Price/Sales (Last 4 Quarters)

2.35

18.53

 

 

 




Price/Book, TTM

1.09

3.96

 

 

 




PEG Ratio (Last 4 Quarters)

2.95

2.35

 

 

 




Growth




EPS Growth (Most Recent Quarter)

37.50%

32.88%

 

 

 




EPS Growth (Last 4 Quarters)

106.25%

31.48%

 

 

 




EPS Growth (Last 5 Years)

-12.48%

30.47%

 

 

 




Projected EPS Growth (Next Year vs. This Year)

105.33%

26.35%

 

 

 




Projected EPS Growth (Next 5 Years)

17.78%

22.61%

 

 

 




Revenue Growth (Last 4 Quarters)

86.44%

23.32%

 

 

 




Revenue Growth (Last 5 Years)

1.11%

18.91%

 

 

 




Capital Spending Growth (Last 5 Years)

-33.54%

23.04%

 

 

 




Book Value per Share Growth (Last 5 Years)

-18.29%

30.06%

 

 

 




Cash Flow Growth (Last 4 Quarters)

0.10%

0.07%

 

 

 




Cash Flow Growth Rate (Last 5 Years)

-12.26%

28.54%

 

 

 




Profitability




Profit Margins




Gross Margin (Annualized)

20.53%

65.61%

 

 

 




Gross Margin (Last 4 Quarters)

19.71%

64.55%

 

 

 




EBITD Margin

19.71%

64.55%

 

 

 




Operating Margin (Annualized)

16.97%

59.15%

 

 

 




Pretax Margin (Annualized)

12.35%

59.15%

 

 

 




Pretax Margin (Last 4 Quarters)

9.28%

58.03%

 

 

 




Returns




Return on Sales (Annualized)

7.50%

36.01%

 

 

 




Return on Sales (Last 4 Quarters)

5.46%

35.29%

 

 

 




Return on Equity TTM

10.11%

30.14%

 

 

 




Return on Assets TTM

2.83%

9.96%

 

 

 




Return on Investment TTM

3.47%

30.14%

 

 

 




Return on Capital TTM

2.67%

-0.07%

 

 

 




Debt




Long Term Debt/Equity (Annualized)

121.03%

0.00%

 

 

 




Long Term Debt/Equity (Last Fiscal Year)

750.00%

0.00%

 

 

 




Total Debt/Assets (Annualized)

45.34%

0.00%

 

 

 




Total Debt/Assets (Last Fiscal Year)

0.58%

0.00%

 

 

 




Total Debt/Capital (Annualized)

53.32%

0.00%

 

 

 




Total Debt/Equity (Last Fiscal Year)

750.00%

0.00%

 

 

 




Current Ratio (Last Fiscal Year)

1.83

1.34

 

 

 




Payout Ratio (Last 4 Quarters)

N/A

21.38

 

 

 




Operating Metrics




Income/Employee (Last 4 Quarters)

$87,535.44

$288,437.55

 

 

 




Revenue/Employee (Last Fiscal Year)

$1.60

$0.82

 

 

 




Assets Turnover (Annualized)

0.45%

0.33%

 

 

 




Asset Turnover (Last 4 Quarters)

0.52%

0.28%

 

 

 




Inventory Turnover (Annualized)

N/A

N/A

 

 

 




Inventory Turnover (Last Fiscal Year)

N/A

N/A

 

 

 




Receivables Turnover (Annualized)

7.06%

9.15%

 

 

 




Receivables Turnover (Last 4 Quarters)

6.45%

9.19%