$30.35
-0.75 (-2.41%)
NII Holdings, Inc. (NIHD)
CAPS Rating:
The Company provides digital wireless communication services, primarily targeted at meeting the needs of customers who use its services primarily for business purposes, through operating companies located in selected Latin American markets.
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Expect subscriber growth to slow to 1/2 of normal due to global recession, say 15%. Expect Fx to stay where it is, becasue I haven't the faintest, which bakes in a 30% decline in $ terms. This equates to a decline in earnings in dollar terms of say 15%. Let's built in an error factor and say 50% decline in earnings in dollar terms in 2009. That would make the today's P/E of 6 a P/E of 12 next year assuming the same price.
However, I expect the outlook in 2009 to be quite different. In 2009 people will be looking towards the recession ending and subscriber growth to go back to the 30% range (still nowhere near full penetration for these markets). At today's price, in 2009 you will be looking at a trailing P/E of 12 with an expected earnings growth rate of 30%. People pay more than a P/E of 12 for a stock they expect to grow 30% a year for a number of years.
This could quite easily be a double three years from now and the downside risk is reasonable. Good return potential average risk potential, I'll take it.