Five Year Vs. Twenty-Five Year Investing

Go dig up an old S&P Capital IQ from 2013 and look up the earnings expectations for Coca-Cola in 2018. You will see that analysts predicted the company would make $3.00 per share in 2018. At the time, the stock traded at $43 per share. Afterwards, as volume gains struggled to take foot, and as currency headwinds affected the company because only 22% of profits are made in the U.S., the figure got revised to $2.80 per share. This was a downward revision of 6.67%.

Once these revised downward forecasts began to take hold, the price of the stock seemingly got stock at around $40 for awhile. This marked a downward shift of 6.98% in the price of the stock. It is not a coincidence that the price of the stock corresponded to changes in the five-year growth expectations of growth for the company. Because there haven’t been extrinsic factors … Read the rest of this article!