“Davidson” submits:

With the sharp rise in price this morning DE offers less yield. The combination is still attractive when one looks at the long-term. It is management’s focus on corporate ‘lean’ culture which provides assurance that the long-term performance should continue.

I look at corp results in the context of the global context. Currently lower levels of inflation and stupidly high US$, still stupidly low 10yr Treas rates will eventually give way to higher inflation, 35%+ lower US$ and 10yr Treas rates closer to 5%.

Net/net, next 5yrs should see improving business environment for DE with investors eventually becoming overly optimistic. Run a trend line through DE’s peak levels over this chart and you get to a number which will startle you but quite likely as the general climate becomes more optimistic. I will let you do the calculation, but 5yrs out it is in the range calculated by beginning with my trend line price today $90shr, compounding it forward at 10.8% for 5yrs and then multiplying by a factor of 2 to adjust price to a market which is overly optimistic.

For companies which are consistently well run, a dividend yield model works as well. Some use Pr/BV or Pr/Sales which would come to 5x or 2x as high points respectively from current relative levels of 3.5 and 0.9.