No Film, Maybe But A Big Negative

This outfit is no Microsoft, Intel, or General Motors. Yet the stock is far pricier than these profitable giants: It's trading at a disturbing 443 times 12-month earnings, 51 times book value, and 44 times sales. What is this unbelievable highflier? It's Presstek (PRST), and if you've never heard of it, you're not alone. The Hudson (N.H.) company has developed a proprietary imaging technology that speeds up printing by a process that eliminates the need for photographic film. Nevertheless, "this is the most bizarre, ridiculously overpriced stock around," says Stephen Leeb, editor of Personal Finance in Alexandria, Va., who predicts it will plunge from 51 to the upper teens.

While the product may have a big potential market, Leeb says "it isn't nearly large enough or fast-growing enough to justify the current valuation." And there is rivalry, he warns, from a number of other players in the business with "less costly products with features that Presstek's process lacks."

He insists that even if the rosiest assumptions about Presstek's growth are taken as gospel, the stock's valuation--currently $745 million--is still "wholly unrealistic." He notes that trailing 12-month revenues are about $20 million. Earnings are 11 cents a share, and the most optimistic forecast for Presstek for 1995 is 30 cents, vs. 1994's 13 cents. A spokesman says the company doesn't comment on the valuation of its stock.

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