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dpdoor (< 20)

Rim's Next 3 yrs Revsd.



September 20, 2007 – Comments (0)

I have found a formula that explains Rim’s prices.


Note:Rim’s Q2 report is Oct 4, 2007


Using the existing rate of growth: Rimm is worth $93 now and will be worth $91 after the Q2 report (Oct 4, 2007). The eps will be up a great 18.7% to .46 but the rate of growth is slowing so the P/e will drop to 61x. (again this is based on the current trajectory.)

The revenues need at least a 20% growth above q1 and an eps of .47 to be worth $95. A 26% growth and a eps of .49 would equal $109. I’v noticed most good stocks trade at about 90% of their value so prices should be $83.7  to $98 and will go up or down after Q3 (Dec. 20) report. If it has a poor outlook due to cutting prices and heavy competition the stock prices could fall drastically.

It’s price is based on its growth trajectory. If it grows at the same rate as the last year for 3 more years then flattens out, the annual eps will be $3.49 , if it’s growth comes down to the normal good business  (3 years from now) then the p/e will be 15x and the share price would be $52.39, (3years at 47% growth and then 15% growth as it matures)

So you can see how the analyst get price targets from $50 to $108 (and one at $120 but they did not give any plausible reason for their estimate.) It could be worth $109 for a few months if they hit their best numbers then go to $50 (3.49 x 15) over the next few years.

These are my mathematical calculations and I am not an expert.

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