Irish Born Investor's avatar
$7.6m follower assets
Do you agree with this chart?
Eric Messenger's avatar
I have seen studies that made this claim about Price/Earnings ratio, Price/Sales ratio, EV/EBITDA, and just read today that you can combine metrics of profitability, management efficiency, and valuation metrics, to outperform by an average of 16%🤯. I think the academic data can probably be manipulated to produce any thing one wants to see in it with so many stocks available at so many variable prices. Definitely too complex to say one metric is the absolute driver of future price. Personally, I think profitability would prove more fruitful of a metric to base my analysis on. Companies can grow fast and still be shitty. Hard to be top of class profitable and be a shitty company.
Scoreboard Investor's avatar
Do you think this could be a result of many growth valuations being based on sales numbers? Just a thought since many of the high flying names in the last decade or so have been "pre-profit"
ThomasFJE's avatar
Yes😁 don’t know any long term winner without substantial revenue growth! Doesn’t take away the importance of earnings but earning money is a lot better once your revenue grows at a nice rate
Reasonable Yield's avatar
Yes and no :)