Inflation and interest rates, both recent and future ones.
Let’s say a company has revenue X and is valued as NX on the stock market. Let’s say they will be increasing prices to maintain profits in the next several years and will reach X+Y just because of that. If nothing else changes fundamentally, they should be valued at N(X+Y) at some point.
Comments
Inflation and interest rates, both recent and future ones.
Let’s say a company has revenue X and is valued as NX on the stock market. Let’s say they will be increasing prices to maintain profits in the next several years and will reach X+Y just because of that. If nothing else changes fundamentally, they should be valued at N(X+Y) at some point.