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Varchild2008 (84.00)

Is DPS waaaaay overpriced? Varchild still thinks so



April 12, 2010 – Comments (0) | RELATED TICKERS: DPS

Despite seeing the stock rally a lot and hold into a range of $34 - $36.... I really do not see how the stock trades where it is....

The only reason it is in the Mid 30s here is because of 2 things...

Euphoria over the Pepsi/Coca Cola deal pushing the P/E multiple from 13 to roughly 16 times earnings.  Investors are paying MUCH MORE for DPS earnings.

I am not a big fan of throwing in Dividend + Cash to value how much I want to pay for a stock in multiple.  My analysis is simply EARNINGS = Multiple.

Top of the Range for DPS earnings this year?    $2.30.
Which gives us a range of $34 - 37.00  for a multiple of 13 - 16.

So....uhm....why exactly are analysts predicting DPS at mid-40s this year?

I think DPS is basically stuck in the range it is in until next year if next year's earnings are greater than this year.

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