CECO

**dchamber** Fri Feb 03, 2006 4:53 pm

CECO
CECO
Analysts predict a 19.5% earning growth rate. They went public in 1998 and since then its earnings have increased each year at an annual rate of over 50% so 19.5% is not unreasonable.

They have a current ratio of 1.6.
The ROE averages 15.1% but it has increased each year.
The book value has increase each year at an average of 46% and analysts expect it to continue at 23% in the next few years.
Its average PE is 27.5 and it is currently at 15.8.

At 19.5% earnings growth I expect a 10 year price of $365/share which would yield amore than a 26.5% annual return.

CONs
Has only been a public company about 8 years. Not a lot of historical information.
No dividend.
Earnings growth estimates seem too high. I don’t think it could sustain 19.5% for 10 years.
I like a current ration of at least 2 and this is 1.6.

PROs
P/E well under its lowest annual average P/E (22.5) and the avg. P/E of the industry (28.3).
Offers a great return.

If I use a 14% EPS growth rate (instead of 19.5%) for 10 years I should still get over a 20% return.
A 20% return is still 5% more than my 15% target so I think this margin of safety compensates for lower current ratio and lack of history.

**blast_investor** Fri Feb 03, 2006 5:38 pm

This stock Career Education CECO is intersting stock pick.

Its valuation seems to be cheaper than its peers. Do you know any reason for the lower valuation?

**dchamber** Fri Feb 03, 2006 6:09 pm

I'm not sure why its values lower. Seems in third and fourth quarter of 05 the came in just under analysts estiamtes. The price declines does nto exactly correspond with these announcments but its close.