PEG Calculation for STV and Price Targets

First of all, this message is meant to be universal so all investors can understand the terminology. I apologize to those that may find this information redundant.

Upon further investigation, I have a better idea on the theoretical price for STV. "Net income" is the same as total profit which is reached by multiplying revenue with the profit margin. EPS (earnings per share) is then calculated by dividing the net income by the share distribution/dilution. If the TTM (trailing twelve month) revenue was $41.6M, TTM profit margin was 52.78%, and total share count was 55.0M, then the TTM EPS is $0.40:

Revenue x profit margin / share count = EPS
41.6M x 0.5278 / 55.5M = $0.40

Here is an updated calculation after third quarter earnings and fourth quarter guidance:

Net income was 12.2 million after the first two quarters, 8.8 million for the third, and fourth quarter revenue is expected to be 15.5-17.5M so I'll use 16.5M for my figures to find the net income for the fourth quarter.

Fourth quarter revenue / third quarter revenue x third quarter net income = fourth quarter net income (assuming profit margins and share count remain unchanged)
16.5M / 14.4M x 8.8M = 10.1M

Annual net income = 12.2M + 8.8M + 10.1M = 31.1M

Current EPS = annual net income / share count
Current EPS = 31.1M / 55.5M = $0.56

Taking the closing price of $38.59 from 11/15/07, here is the PE (price to earnings ratio):

PE = price / earnings
PE = $38.59 / 0.56 = 68.9

The company expects its year-over-year growth to be in the range of 61-82% so now here is the PEG (price to earnings over growth ratio).

PEG = price / earnings / growth

1a. PEG based on 30% growth = $38.59 / 0.56 / 30% = 2.30
2b. PEG based on 40% growth = $38.59 / 0.56 / 40% = 1.72
3c. PEG based on 50% growth = $38.59 / 0.56 / 50% = 1.38
4d. PEG based on 60% growth = $38.59 / 0.56 / 60% = 1.15
5e. PEG based on 70% growth = $38.59 / 0.56 / 70% = 0.98
6f. PEG based on 80% growth = $38.59 / 0.56 / 80% = 0.86
7g. PEG based on 90% growth = $38.59 / 0.56 / 90% = 0.76
8h. PEG based on 100% growth = $38.59 / 0.56 / 100% = 0.69

Price target (52 weeks) = price x [(growth percentage / 100) + 1]

1. Price target based on 30% growth = $38.59 x 1.3 = $50.17
2. Price target based on 40% growth = $38.59 x 1.4 = $54.03
3. Price target based on 50% growth = $38.59 x 1.5 = $57.89
4. Price target based on 60% growth = $38.59 x 1.6 = $61.74
5. Price target based on 70% growth = $38.59 x 1.7 = $65.60
6. Price target based on 80% growth = $38.59 x 1.8 = $69.47
7. Price target based on 90% growth = $38.59 x 1.9 = $73.32
8. Price target based on 100% growth = $38.59 x 2.0 = $77.18

Price target (52 weeks) with PEG comparison = comparative's PEG / PEG x [(growth percentage / 100) + 1] x price

a. 30% growth vs 1.50 PEG target price = 1.50 / 2.30 x 1.3 x $38.59 = $32.72
b. 40% growth vs 1.50 PEG target price = 1.50 / 1.72 x 1.4 x $38.59 = $47.11
c. 50% growth vs 1.50 PEG target price = 1.50 / 1.38 x 1.5 x $38.59 = $62.92
d. 60% growth vs 1.50 PEG target price = 1.50 / 1.15 x 1.6 x $38.59 = $80.54
e. 70% growth vs 1.50 PEG target price = 1.50 / 0.98 x 1.7 x $38.59 = $100.41
f. 80% growth vs 1.50 PEG target price = 1.50 / 0.86 x 1.8 x $38.59 = $121.15
g. 90% growth vs 1.50 PEG target price = 1.50 / 0.76 x 1.9 x $38.59 = $144.71
h. 100% growth vs 1.50 PEG target price = 1.50 / 0.69 x 2.0 x $38.59 = $167.78

For PEG comparison of 2.0, just multiply the price targets above by 1.33. For PEG comparison of 1.0, multiply 0.67