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Strategies & Market Trends : Value Investing

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To: Praxis who wrote (5244)	11/8/1998 1:27:00 PM
From: cfimx	Read Replies (1) of 78825

>>Growth in Revenue+ Growth in Earnings= Growth in EPS= Share price appreciation<<< nope- not a buffet tenet and all good growth/value investors absolutely do NOT rely on this formula. This statement might be true: "growth in revenue + growth in earnings = growth in eps." But it certainly is NOT a formula for share price appreciation. What you are missing is dilution. I could grow my earnings a lot if I have a boat load of new capital from shareholders to invest as I see fit. Just putting it in the bank would add to EPS. The question for shareholders and management is "what return can you deliver on the money I give you?" The answer to THAT question might either be a formula for share price appreciation—or depreciation.

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