What I don't get from your write ups is how or why RSH should return to
historical earnings levels.
Not exact matches
Unfortunately, most studies indicate that portfolios constructed using just high
levels of
historical or expected
earnings growth tend to underperform the market.
Emerson is A rated, offers an above - average current yield of 3.8 %, and is expected to return to
historical earnings growth
levels in the future.
This is assuming the
earnings growth rate going forward is 7.2 percent (i.e., comparable to its long - term
historical average of 7.41 percent) and interest rates remain at the current all - time low
levels.
Similarly, with banks we said something like Bank of Hawaii can grow 3 % a year forever while paying out 100 % of
earnings (in dividends, buybacks, etc.) If BOH grows much faster than 3 %, it then needs to retain
earnings to keep its capital
levels in line with the
historical norm.
As shown, the late 1990s saw the highest p / e
levels in history, and the
earnings growth of this bull market has brought it back in line with
historical readings.
Thanks to unusually high debt
levels and unusually low labor compensation in recent years, the
earnings peak in 2007 was based on profit margins that were about 50 % above the
historical average, and which have now collapsed.