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Message: Vector Vest raises target to .35

Vector Vest raises target to .35

posted on Oct 10, 2009 11:40AM
Capital Appreciation
Value: Value is a measure of a stock's current worth. EDIG has a current Value of $0.35 per share. Therefore, it is undervalued compared to its Price of $0.22 per share. Value is computed from forecasted earnings per share, forecasted earnings growth, profitability, interest, and inflation rates. Value increases when earnings, earnings growth rate and profitability increase, and when interest and inflation rates decrease. VectorVest advocates the purchase of undervalued stocks. At some point in time, a stock's Price and Value always will converge.

RT (Relative Timing): RT is a fast, smart, accurate indicator of a stock's price trend. EDIG has a Relative Timing rating of 2.00, which is excellent on a scale of 0.00 to 2.00. RT is computed from an analysis of the direction, magnitude, and dynamics of a stock's price movements over one day, one week, one quarter and one year time periods. Once a stock's price has established a strong trend, it is expected to continue in that trend for the short-term. If a trend dissipates, RT will gravitate toward 1.00. RT will explode from bottoms, dive from tops, and reflect changes in price momentum. VectorVest favors the purchase of stocks with RT ratings above 1.00.

GPE (Growth to P/E Ratio): GPE is another popular measure of stock valuation. It compares earnings growth rate to P/E ratio. EDIG has a GPE rating of 0.94. High growth stocks are believed to be able to justify high P/E ratios. A stock is commonly considered to be undervalued when GPE is greater than 1.00 and overvalued when GPE is below 1.00. Unfortunately, this rule of thumb does not take into account the effect of interest rates on P/E ratios. The operative GPE ratio of 1.00 is valid when and only when interest rates equal 10%. With long-term interest rates currently at 4.28%, the operative GPE ratio is 0.18. Therefore, EDIG may be considered to be undervalued.

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