Ch.10 · Risk Measures and Ratios · medium
What is 'earnings per share' (EPS) growth and why do equity fund managers focus on it?
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EXPLANATION
EPS growth = (Current EPS - Previous EPS) / Previous EPS × 100. Since stock prices ultimately follow earnings over the long term, fund managers focus on companies with consistent EPS growth. Growth-oriented equity funds specifically target companies with above-average earnings growth expectations, even if current valuations appear expensive.
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