In the past I did that too. My valuation model used several metrics including the robustness of earnings.
While true to some extent, I used to pick stocks based on the earnings stability; they were often not highly expensive per PE. High PE requires growth no matter how stable the earnings are.
It depends, I know companies where profits were stable, but the source of profits was poorly diversified. Then the valuation here were actually low.
As a stock picker you have to be careful because those companies seems to have little risk when it comes to quantitative screening.
Here it only helps to study the annual reports carefully.
Btw. at the individual company level, there are an infinite number of non-quantitative factors that influence the valuation.
But earnings volatility would at least be a quantitative factor.
And all of this is missing from your abstract considerations in this thread. Unfortunately, the reality is much more complex.This isn't disputing anything I've said previously.
You're trying to explain the world with a calculator.
That's why you're going around in circles here.
Statistics: Posted by markus75 — Sun Jan 12, 2025 5:03 pm