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Earnings Growth

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Why valuation multiples fail in an exponential world

Estimating the value of a company based on a multiple of earnings is a common investment analysis technique, but it is often useless. Multiples do a poor job of valuing the best growth businesses, like Microsoft.

Bank reporting season scorecard for FY19

Our annual scorecard for Australian banks shows earnings were hit by remediation costs and slow credit growth, but they are in good health and look attractive versus other listed companies. 

Bank reporting season scorecard for FY18

This exclusive annual scorecard checks bank results in a difficult year, and looks ahead at the hurdles and opportunities for the sector that many Australians rely on for their income.

Going global? Don’t break the 'Golden Rule'

In many valuations, the ‘Golden Rule’ is being broken. Earnings growth is assuming the sort of strong economic activity that would trigger higher interest rates, yet investors are delinking the two.

Blue skies for consumers, caution for investors

Markets and assets look expensive, but technology at least offers high revenue growth and fast rates of adoption. However, much of that great promise may benefit consumers more than investors.

Bank reporting season scorecard: May 2018

Our regular check on the 'star' performances from the Australian banks' May 2018 reporting season in the face of low credit growth, increased regulatory scrutiny and the sales of insurance and wealth management divisions.

Little room for error in equity markets now

Investors are complacent and expect double-digit profit growth to continue for many years, but the market consensus for EPS growth is now in dangerous territory with more downside potential than upside.

Unconstrained growth found in fresh places

The Australian market is dominated by 12 large companies that are low-growth yield plays. Investors need to look in other places for diversification and growth opportunities.

The world changes, then stays the same

The investment landscape might have changed dramatically over the last 25 years, but investors can still rely on many of the same principles from the past to make sound investment decisions in the present.

Low rates and the equity risk premium

With investors gravitating towards ‘safer’ equities for yield, the equity risk premium is playing an important role in the variance of earnings multiples between defensive and cyclical sectors of the Australian equity market.

Pay attention to how growth is financed

Not all company growth is created equal. While a headline growth figure may look impressive, it's how this growth is financed that determines whether it's a good or bad thing for shareholders.

If the small cap fits, wear it

There are reasons why small cap stocks have a history of long term outperformance, although recently, the preference for defensive large cap yields has dominated.

Most viewed in recent weeks

Vale Graham Hand

It’s with heavy hearts that we announce Firstlinks’ co-founder and former Managing Editor, Graham Hand, has died aged 66. Graham was a legendary figure in the finance industry and here are three tributes to him.

The nuts and bolts of family trusts

There are well over 800,000 family trusts in Australia, controlling more than $3 trillion of assets. Here's a guide on whether a family trust may have a place in your individual investment strategy.

Welcome to Firstlinks Edition 583 with weekend update

Investing guru Howard Marks says he had two epiphanies while visiting Australia recently: the two major asset classes aren’t what you think they are, and one key decision matters above all else when building portfolios.

  • 24 October 2024

Warren Buffett is preparing for a bear market. Should you?

Berkshire Hathaway’s third quarter earnings update reveals Buffett is selling stocks and building record cash reserves. Here’s a look at his track record in calling market tops and whether you should follow his lead and dial down risk.

Preserving wealth through generations is hard

How have so many wealthy families through history managed to squander their fortunes? This looks at the lessons from these families and offers several solutions to making and keeping money over the long-term.

A big win for bank customers against scammers

A recent ruling from The Australian Financial Complaints Authority may herald a new era for financial scams. For the first time, a bank is being forced to reimburse a customer for the amount they were scammed.

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