Monday, September 22, 2014

Revenue is Important

Revenue is the driver for both earnings and cash flow. There can be long term problems if earnings and/or cash flow growth is higher than the growth in revenue. You can have lower growth in revenue than in earnings and/or cash flow for a long while sometimes, but eventually, either revenue growth will have to equal earnings and/or cash flow growth.

What can happen is the company can grow their revenue. If this cannot happen, then the growth in earnings and/or cash flow will have to slow to the growth in revenues.

Dividend growth is tied into this also. Dividends can sometimes outgrowth EPS and/or CFPS, but this also cannot go on forever. Either a company will have to increase EPS and/or CFPS or lower the growth in dividends.

On dividend growth companies on a long term basis, the stock price growth will keep pace with the growth in dividends.

On my other blog I am today writing about Wajax Corp. (TSX-WJX, OTC-WJXFF) .. continue...

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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