If you buy a business whose earnings are higher in the future, it’s likely the share price will be as well. Consider a simple example. You buy a 100 stock earning 10, ie an undemanding P/E of 10X. If its earnings grow at 12%pa, in ten years it will be earning almost 28. Providing the P/E’s unchanged, it will be trading at 280. If it is still trading at 100, the P/E would be just 3.6X, an unlikely scenario.
If you select good stocks, determine and specific that the price is within a range of fair value. If you select growth stocks determine and specific the round amount which the buyer at the current price is already paying for a growth factor as compared with it’s reasonable price if the growth prospects were only […]
Which price ratio outperforms the enterprise multiple? In their very recent paper, “Analyzing Valuation Measures: A Performance Horse-Race over the past 40 Years,” Wes Gray and Jack Vogel asked, “Which valuation metric has historically performed the best?“- Gray and Vogel examine a range of price ratios over the period 1971 to 2010: Earnings to Market […]
Marketing is not the art of finding ingenuous ways to exhibit what you do. Marketing is the art of creating genuine value before your clients and helping them to improve. The keywords of Marketing are “Quality”, “Service” and “Value”. Every business is a service business. You’re not a chemical company. You’re a company of chemical services. […]