Re-analyzing LOW
I was looking over my MOS numbers that I calculated and realized that I may have over-estimated my sticker price. Looking back at my post about Rule One Analysis of Lowes the numbers used to calculated the MOS were as follows
- Equity = 14% (near typical growth rate)
- EPS = $1.98
- Future PE = 22 (historical)
This provides a sticker price of $39.92. However, the Price per Earnings ratio has been decreasing for the past 5 years. The last two years the PE has been 18 and 16 respectively. This makes me wonder if a PE ratio of 22 is too high.
Therefore, reanalyzing the PE somewhere between the current value and past values. If I take the average between 13 (current value) and 23 (average past value).
This provides a sticker price of $32 and a Margin of Service of $16.
I’ve already purchased the LOW stock at $22.30 which be at a 30% discount and not the 50% discount that we’re looking for. So, now I’m faithfully watching LOW and using my Technical indicators to see when to get out.
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Tuesday, January 29th, 2008 at 7:47 pm under