Predictable EPS Growth and the Performance of Value Investing

Previous research finds that EPS growth is difficult to predict and reasons that much of the observed variation in valuation multiples is due to mispricing (e.g., Lakonishok, Shleifer, and Vishny, 1994; Chan, Karceski, and Lakonishok, 2003; Israel, Laursen, and Richardson, 2021). We revisit these findings and document robust evidence of predictability in EPS growth rates. Moreover, we find that this predictable growth is reflected in stock prices. We show that common ‘value investing’ strategies select stocks with predictably lower EPS growth and that this helps to explain their recent performance

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Year of publication:	[2022]
Authors:	Wang, Annika Yu ; Sloan, Richard G.
Publisher:	[S.l.] : SSRN
Subject:	Wirtschaftswachstum \| Economic growth \| Kapitaleinkommen \| Capital income \| Prognoseverfahren \| Forecasting model \| Finanzanalyse \| Financial analysis \| Portfolio-Management \| Portfolio selection

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