Sentences with phrase «in valuation multiples»

The last component of total returns is the change in the valuation multiple.

The start of a contraction in valuation multiples has historically come long before high levels of inflation.

In contrast, high valuations have been associated with poor average returns, and a low probability of further increases in valuation multiples.

From those levels large companies began an impressive multi-year rally in valuation multiples.

The speculative component rose above 100 percent during the 2008 - 2009 bear market, when the drop in valuation multiples made up the entire loss in share value, on average.

About 80 percent of first - year returns typically come from a change in valuation multiples and 20 percent from a change in fundamentals.

Aside from dividends paid, price appreciation breaks down into two sources: growth in FFO / AFFO and / or expansion in the valuation multiple (price - to - FFO or price - to - AFFO ratio).

Rather than rely on past averages to forecast future returns, we use a building - block approach that adds current yield, likely long - term growth in income, and some mean reversion in valuation multiples to create forward - looking returns.

One way to project future expected returns, and to analyze past returns, is to separate them into a component that comes from growth in fundamentals and the component that comes from the change in the valuation multiple on those fundamentals.

Those expectations are embedded in the valuation multiple of the stock.

One is a pure contraction in valuation multiples, where prices plummet but fundamentals like revenue and earnings remain mostly unchanged.

The change in the valuation multiple, proxied by Shiller's cyclically adjusted price - to - earnings ratio (CAPE), contributed 0.30 % to total returns over the last 130 years.

I found this projection interesting and set out to examine how realistic it is, given what we know at this point in time, by decomposing total stock returns to its components, namely dividend yield, inflation, real earnings growth and change in the valuation multiple.

As the period of analysis lengthens, a larger contribution of a stock's return comes from a change in the fundamentals, compared with the contribution from a change in valuation multiples.

But what really drives the change in valuation multiples is the numerator; the price investors are willing to pay for a certain amount of earnings.