The Growth tab: history and what the price assumes
Revenue bars, value creation per share, and the comparison between price and analyst expectations.
You will learn
- How to read growth over 1, 3, 5 and 10 years
- Why growth per share matters more than total growth
- How to tell whether a price already assumes too much
Transcript
Lesson six: the Growth tab. A fair value depends on what the business will earn, so this tab shows what it earned, and what the price already assumes.
The bars are revenue per fiscal year. Green years grew, red years shrank. The cards above give the growth rate over one, three, five and ten years, so a single boom year cannot fool you.
The box 'what shareholders gained per year' is earnings growth per share plus the dividend. Per share matters: a company that buys back shares grows your slice even if revenue is flat.
Then the forecast: on the left, how fast the company would have to grow for today's price to be justified. On the right, what analysts expect. If the price assumes much more than analysts expect, you are paying for optimism.
This comparison is my favourite single check. It turns a vague feeling of 'expensive' into a number you can argue with.