Tag: value investing;operating leverage

How to Find the Next Multi-Bagger by Understanding Operating Expenses

Reported earnings of high growth companies are often misunderstood by investors. Current earnings do not equate to real earning power. Companies that are growing rapidly often reinvest heavily and their earnings are distorted as a result. Earnings are the reported numbers. But real earnings power reflects the ability of the company to earn high rates of return on capital and grow at a high clip.

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