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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.

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10 little-known pension traps prove the value of advice

Most people entering retirement do not see a financial adviser, mainly due to cost. It's a major problem because there are small mistakes a retiree can make which are expensive and avoidable if a few tips were known.

Check eligibility for the Commonwealth Seniors Health Card

Eligibility for the Commonwealth Seniors Health Card has no asset test and a relatively high income test. It's worth checking eligibility and the benefits of qualifying to save on the cost of medications.

Hamish Douglass on why the movie hasn’t ended yet

The focus is on Magellan for its investment performance and departure of the CEO, but Douglass says the pandemic, inflation, rising rates and Middle East tensions have not played out. Vindication is always long term.

Start the year right with the 2022 Retiree Checklist

This is our annual checklist of what retirees need to be aware of in 2022. It is a long list of 25 items and not everything will apply to your situation. Run your eye over the benefits and entitlements.

At 98-years-old, Charlie Munger still delivers the one-liners

The Warren Buffett/Charlie Munger partnership is the stuff of legends, but even Charlie admits it is coming to an end ("I'm nearly dead"). He is one of the few people in investing prepared to say what he thinks.

Should I pay off the mortgage or top up my superannuation?

Depending on personal circumstances, it may be time to rethink the bias to paying down housing debt over wealth accumulation in super. Do the sums and ask these four questions to plan for your future.

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