Forum Archive Index - March 2003

["Dick O'Connor" <callme_nz@hotmail.com>]

Bill, If I may - regarding your statement: As at 31 July 1998 WHS share 
price was $1.85 and allowing your (Winner's) suggested earnings growth of 
16% per annum the present price should be appx$3.82.

The Warehouse was not selling for the amount you mention at the time you 
mention, but for approximtely twice that figure. I imagine you arrived at 
the $1.85 because of working backwards to take account of the 1:1 bonus 
issue in March 00.

What has happened is that a person with 1000 shares in July 98, worth 
approximately $3600….now has 2000 shares worth about $11,000,an increase of 
approximately 27% a year compounded. (Of course, the WHS shares have not 
grown at a steady rate each year because it has had its ups and downs. The 
company has signalled that its growth rate this year is expected to be about 
12%.)

If you used the 12% as the PEG rating, you would give it a “fair” price of 
12 times earnings. The hard part is trying to figure out an accurate PEG 
rating in view of the ups and downs, and a guess about what the next two or 
three years might bring. In times like the present, with so much 
uncertainty, one is usually conservative rather than optimistic.















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