Читать книгу Cotter On Investing - John Cotter - Страница 10

The relationship between the value of a company and its level of profits is obviously a very important one. The correlation between share price growth and earnings per share growth is positive and in the long-term very close. Clearly, as the profits of a company rise the price of its shares will ultimately follow – the problem for investors is the exact timing of the share price response to rising profits.

If we can forecast the profits of a company (and this is often possible) and we understand the relationship between a company’s profit growth and share price growth then this provides a possible solution to forecasting future share prices.