Stock purchase plan, is there something I'm missing?

[Hedy]

Open enrollment for my employer's stock purchase plan is coming up, and I'm eligible for the first time. I'm planning on not enrolling, but I want to lay my cards on the table to make sure I'm not missing anything:
1. At present, I contribute 5% of my pre-tax income to my 401K, I am not yet eligible for a company match. I also contribute 15% of each net paycheck to my Roth IRA. I'm in my early 20's and one year out of college.
2. My employer's stock is not an exceptionally well-performing stock (Yahoo Finance has it's YTD performance as 2.9%). I would get the stock at a 5% discount.

Am I missing some reason why enrolling in the stock purchase plan is a good idea?

My humble opinion... That 5% discount is free money. You're getting $100 worth of stock for $95, that's a good deal. If you have confidence that your company is solid, you're not already overweighted on your company's stock, and you can afford it, I would go for it.

[Hedy]

My humble opinion... That 5% discount is free money. You're getting $100 worth of stock for $95, that's a good deal. If you have confidence that your company is solid, you're not already overweighted on your company's stock, and you can afford it, I would go for it.

Good point. From a numbers standpoint, though, even though I get the discount, wouldn't the money be better off in a better performing investment? Is there some sort of calculation I could do to figure a break even point? Am I over thinking this?

Well, your immediate return is 5/95 = 5.3%. Plus add on whatever you think your company's stock can return (plus dividends, if any). Also not sure about your plan, but some stock purchases plans have a "lookback" feature which means if the stock goes up during the purchase period, you still can buy it at the lower price.

Just as with anything though, your mileage may vary. Be sure to look at your personal situation and the specifics of your plan before pulling the trigger. Keep in mind too that there's no guarantee that your company stock won't fall after buying in.

[Hedy]

Its P/E is 17.44-is that low or am I off?

[LivingAlmostLarge]

Free money we max ours out and use it as a savings account. Cash out in 6 months and dump the money elsewhere. Right now tuition for DH or home repairs.

P/E ratio by itself doesn't tell much. It depends on the industry you're in and the growth prospects for your company.

If your plan is like LivingAlmostLarge's and you can cash out relatively quickly, that would be another big plus.

[Hypersion]

I maxed out my ESPP and flip it, I get a 10% guanteed return with almost no risk since I sell right away.