|I agree that PEGs are sometimes out of line particularly when the stocks have only 1 or 2 analysts providing data.|
<<PEGs are just nonsense, COHU 27% growth, ASML 7%, that's ridiculous.>>
COHU presently has only one company, Needham, providing data. About the only time the data is changed is when quarterly reports are issued, and sometimes not even then. Looking at the analysis for Dec 2009, COHU had the same 27 percent growth rate predicted, and it probably goes back much further than that. Of all the companies I follow, COHU is probably the worst example of growth rate in that regard.
ASML on the other hand is a little different story. In Dec 2009, ASML had 3 analysts following the company and the consensus growth rate was 7. Over the past nearly 2 years, the number of analysts have varied from 3 to 5(presently the number is 5), and the growth rates has crept up to 10.4 where it stood the week of 10/14. This past week, 10/21, these 5 analysts moved the growth rate back to 6.5. Why, I obviously don't know, but I do report it. However, having said that, we might surmise it has something to do with the earnings outlook. Over the past several weeks/months, ASML earnings for 2012 have been ratcheting down to presently stand at 2.81 for 2012 compared to 4.51 for 2011. It should be noted that since ASML has reported for the first 3 quarters of 2011, the estimate for 2011 should be very good. I am sure that the growth rate reversal has to do with the large cutback in 2012 earnings outlook. Just as example, for the week of 2/18/11, the estimates for 2011 and 2012 were 3.67 and 4.02 respectively. Bottom line, I would say the present growth rate estimate of 6.5 has some credibility.
Now for LRCX. The present estimate of 2.46 is for FY11 which runs from 6/2011 to 6/2012. The 3.92 number is for 6/2012 to 6/2013. For the first quarter of FY2012, they just reported Wednesday an EPS of 0.58. Looking at that number and a further slowdown ahead for the next 3 quarters means the 2.46 number is too high. Other sources different than Yahoo, already have a new number of 1.88 for FY2012 and 3.77 for FY2013. I think the number from Yahoo in a week or 2 will come down further as the results of the earnings report are digested. LRCX should be interesting to watch as the new earnings estimates are reacted to by the market. After the earnings announcement on Wednesday, LRCX dropped 6 percent on Thursday and rebounded 1 percent on Friday.
<<Even with the year end rally I do not see much upside for SCE stocks here. Only way to play at the moment is to buy the dip after the earnings for a very short term bounce.>>
I agree with you 100 percent.