What Drives Value?

Alright, I will admit it...I'm a consultant and when I normally talk about value, I'm thinking about it from a customer standpoint, not necessarily from that of a shareholder.

I would like to know, what are the key financial ratios that move the share price for various industries. I'm looking beyond basic profitability or growth....unless that is the driver, and wondering what ratios are given more weight by analysts, and was hoping the brilliant finance people here could give me some insights for what really drives shareholder value in various industries.

....or if you know where I can find this information in a common place.

Thanks,

TT

 
Best Response

In general everything pretty much boils down to sales growth, margin growth, better ROIC, accretive M&A, restructuring, management. Lower interest/taxes doesn't hurt. You want a company that will continue to grow its top line and effectively converts that revenue to cash, which is facilitated by creating a moat around its business, building a strong brand, operating efficiently in terms of expenses/capex/working capital/etc. Thats my high level view.

 

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