NTDOY, too much hoopla?

[eats]

ntdoy has some sleeper hits in the works. Mario Galaxy which comes out tomorrow is getting amazing reviews across the board. Super Smash Bros Melee(biggest game on the schedule) which is coming out in february has even the traditionally hardest to please players impressed: www.ntdoy.net
Wii fit is also going to be big with the casual users. There are a lot of good reasons for Nintendo to be doing as well as it is.

[pig4bill]

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According to Yahoo (which I wouldn't trust) a 30x PE, trading at $45.50 with a $1.35 EPS estimated by analysts.

Ben Graham had a formula that simplified doing discounted cash flow analysis.

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V* = EPS (8.5 + 2g) 4.4 / Y

Where:

EPS : the company’s last 12-month earnings per share. g : the company’s long-term (five years) earnings growth estimate. 8.5 : the constant represents the appropriate P-E ratio for a no-growth company as proposed by Graham. 4.4 : the average yield of high-grade corporate bonds in 1962, when this model was introduced. Y : the current yield on AAA corporate bonds


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If I do the math right (and all our inputs are correct), Ben's formula says that at current prices Nintendo has an EPS growth rate expectation of 13.5% per year for the next 7-10 years. That doesn't seem unreasonable for me. Not cheap, and little margin of safety in a hit driven business like video games, but not unreasonable.

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A 30 PE with a 13.5% growth rate sounds reasonable to you?