or «Will
valuation multiples expand or contract going forward?».
During multi-year periods when
valuation multiples expand and growth stocks are in favor, it seems clear that we will struggle to keep pace with the market.
During multi-year periods when
valuation multiples expand, we may struggle to keep pace with the market.
In the 12 months ended 2015 Q3,
valuation multiples expanded by an amount roughly equivalent to earnings» contraction, but in early 2016 prices are rapidly adjusting.
Not exact matches
Assuming Box's
multiple doesn't
expand, Dropbox would need to grow its annual sales to ~ $ 1.4 B (or 226 % growth from 2014 revenue of $ 400M) just to justify its private market
valuation of $ 10B.
The company's strengths can be seen in
multiple areas, such as its reasonable
valuation levels,
expanding profit margins, largely solid financial position with reasonable debt levels by most measures and notable return on equity.
Stocks can see their PE
multiples expand and contract in a manner that has almost nothing to do with changes in EPS, which makes looking at these metrics a poor indicator of
valuation or future returns.
«At 15x and 11x NTM EPS and FCF, the stock is trading near the upper - end of its recent
valuation range and we believe it is tough to expect the
multiple to
expand,» wrote Lamba of Apple.
The company's strengths can be seen in
multiple areas, such as its notable return on equity, attractive
valuation levels,
expanding profit margins, good cash flow from operations and increase in stock price during the past year.
The current advance began at a
multiple of 16, so even from the beginning we had less room for
valuations to
expand, compared with those unusually long bulls.
That said, a larger - than - expected QE program should be a tailwind for European cyclical companies as it would
expand multiples, in much the same way that U.S. QE has driven
valuations higher.
Standard Total Return approaches receive a boost during times of low
valuations as
multiples expand.
And that's why value investing tends to work: companies with cheap
valuations improve, and
multiples expand.
Presuming a steady / substantial reduction in customer concentration (the NJ gaming launch will help, though it's off to a slow start), we may reasonably anticipate accelerated growth in GAME's intrinsic value, based on healthy revenue / profit growth &
expanding valuation multiples.