Steady Growth in Earnings are key, Prof Price

“Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily-understandable business whose earnings are virtually certain to be materially higher five, ten and twenty years from now.”

“Put together a portfolio of companies whose aggregate earnings march upward over the years, and so also will be the portfolio’s market value.”

Both quotes are from Warren Buffet, and earnings was another topic that Professor John Price taught at out share-investing club Mar 20 2011.

Earnings are often expressed as Earnings Per Share (EPS). The importance of steady EPS (and their growth) over several years, to the price of a stock was illustrated comparing several companies.

Downer EDI had EPS 23c, 10 years ago, now 59c, which is 2.57 times, and the share price was $1.64, 10 years ago, now $3.82, which is 2.33 times, similar growth of price to EPS.

UGL, in 10 years, has had 6.77 times growth in EPS, and 6.98 times growth in share price.

Telstra however has had EPS growth 0.95 and share growth 0.49 – in other words they have BOTH DECREASED.

His own software has been developed over 12 years and can be subscribed to (no commercial affiliation) see http://www.conscious-investor.com/. SuperBenefit uses Conscious Investor and teaches clients from it for no extra cost. It has helped us achieve returns of up to 100% while the Australian market rose 33% for the year 2009. Clients learn about the factors that make successful investments.

To learn some of those factors for FREE, see the seminar tab above.

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