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but if they are really taking so much share then why are orders only growing 15%? Wouldn't they be growing far faster given what a small piece of the overall pie NILE represents?
Nov 08 20:18 pm
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All Comments by coitus »Blue Nile: A Classic Underpromise, Overdeliver Company [View article]
My other point is this, if the company can grow earnings 25% per year, what multiple do you assume the company will trade on 2010 earnings? Assuming they earn $1.05 in '07 and grow 25% per year then 2010 earnings will be $2.05. Let's assume they slow down to 20% growth after that. At a 1.5x PEG, the mutliple would be 30x. 30x $2.05 in earnings, you have a $61 stock. Congratulations, you've managed to lose $20 per share off of today's close over the next 3 years. To justify this multiple, you need to have hyper growth - 15% growth in orders isn't hyper growth.