Replies to post #143991 on Zeev's Turnips Patch-No Politics (ZEEV)

[Train Guy]

I think what he was really pointing out is that it is next to impossible to do an apple to apples comparison. It all depends on your assumptions and guesses. What's the current P/E? He gave a number of examples and the numbers are all over the place depending on how you want to calculate it.

He prefers to look at whether current growth prospects can support the current P/E's. Here's an analyst he did on INTU, http://dai.multexinvestor.com/Article.aspx?docid=1451&target=screenedgems&nd=0628_DAI_AAC_L0... If you read through it, you'll see it all depends on what numbers you use and your assumptions.


Value Connection: Justifying Intuit's valuation
28 Jun 2003 Marc Gerstein Director of investment research MultexInvestor

There isn't much margin for error if Intuit can't deliver what Wall Street wants

There's no law that says all investors must rely on value-investing methods. In fact, experienced investment-community participants and stock-market observers know full well that many investors do quite well over prolonged periods despite—or perhaps even because of—the fact that they emphasized highly valued stocks.

Problems occur, though, when such investors don't fully understand the nature of what they are doing and get swept by the tide into extreme positions. That's when losses pile up. So if you invest aggressively, at least make sure you're also doing so knowledgeably.

Keep basic principles in mind

One way to be knowledgeable is to keep basic valuation principles in mind. This can mean the difference between a thoughtful, well-reasoned expectation that the market will carry a richly priced stock higher and a passive, perhaps even unconscious, assumption that if many investors are rushing into a stock, then it must be a good investment.

Today, we'll apply our Value Connection expectation analysis to Intuit (INTU), one of the stocks discussed in this week's article on the Sales Growth Leaders screen.

INTU: Appealing to growth investors?

As regular readers must surely know by now, I have a bias toward value- and quality-investing styles, and I therefore do not find this stock appealing. Still, the goal of the Value Connection method of analysis is to show growth investors where INTU stands in terms of rational valuation and to promote an approach that helps them determine whether it's reasonable to expect INTU to have more room to run. Such investors might answer "yes" if they 1) think INTU can grow into its present valuation, or 2) they believe INTU's valuation isn't so far out of line as to preclude the stock from participating in bouts of favorable market sentiment.

Click to see all the tables and reasoning behind the conclusion, http://dai.multexinvestor.com/Article.aspx?docid=1451&target=screenedgems&nd=0628_DAI_AAC_L0...