Social Sharing
Extended Viewer
It's Not Higgledy-Piggledy Growth!
Nov 1, 1992
Contrary to the findings of other studies, the authors of this study find that earnings changes are not randomly distributed. Using earnings-to-price ratio as the market's implicit forecast of future earnings growth, they find that the market appears to differentiate the earnings prospects of companies quite well. On average, high E/P stocks tend to have significantly poorer earnings growth; low E/P stocks tend to have significantly higher earnings growth.