Criterion criteria critiqued

In his News Ltd piece Tim Borham says that

Criterion agrees the offer looks generous on Cellestis's current earnings.

And if you just look at earnings as expressed in the CST ASX ann

A price to earnings multiple of 37.1x for the 12 months ending December 2010

yes, they could be viewed as being generous. But others argue that using PE is inappropriate as Cellestis has only just begun to make those earnings

New CDC IGRA Guidelines represent a 'quantum' shift for the U.S. market 

Largest single market for QFT

Est. 17 million skin tests per year are performed in U.S.- 2010 AGM

To all intents and purposes CST is a growth stock and the growth has been defined as

Revenue growth of between 30% and 40% is expected for full fiscal year 2011...our goal in FY2012 is to achieve similar revenue growth as this fiscal year.

A PE ratio that equals growth is fair and reasonable, not generous.

"The P/E ratio of any company that's fairly priced will equal its growth rate" - Peter Lynch

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