By Frank Caruso via Iris.xyz
As earnings season rumbles on, analysts remain fixated on the bottom line of company reports. But earnings tell only a partial story. There’s a better way to identify businesses that can generate long-term growth.
Just look at the news headlines and it’s clear that earnings are what matters most for many investors. “Time Warner earnings beat expectations.” “Whole Foods slides after missing on earnings.” “Coca-Cola earnings retreat 5%.”
ARE EARNINGS THE BEST BAROMETER?
Yet earnings might not really be the best barometer to gauge a company’s true economic prospects. Earnings can’t tell you how skillfully a management team deploys capital. They offer no insight into the quality of a company’s profit streams. And earnings alone can’t really identify companies that can generate long-term value for shareholders, in our view.
Click here to read the full story on Iris.xyz.