Uber is the largest loss-making startup in history, and while investors will climb aboard the IPO and return money to early investors, the stockmarket will eventually realise there is no identifiable path to Uber profitability.
Tag Archives | profitability
Exogenous factors like macro changes and weather can affect a company’s short-term profits. Management often blames uncontrollable factors for earnings downgrades but rarely owns up to a fortuitous tailwind.
Dividend streams tend to be stable and determined by fundamental factors. Unlike capital valuations, which are affected by estimates of prospective returns which are, in turn, strongly affected by market sentiment.
LICs can sustain their dividends not only from current year profits, but from reserves built up in prior years. This report looks at reserve levels as a sign of consistency of future dividends.
A ‘Goldilocks economy’ is one which runs neither too hot nor too cold. A combination of steady global growth, benign inflation and easy monetary conditions is carrying share markets to higher levels.
The surprising fact from this study of profitability is that there’s no such thing as a ‘bad’ industry, only inadequate or inappropriate management.
Not all business use their capital in the most productive way, and investors need to recognise when companies are struggling to generate cash flows to pay off debts when due.
There’s more to a company’s profitability than the headline dollar figure. Measures such as return on equity, return on assets and profit margin can provide a much better and balanced perspective.
Turnarounds are not easy. As Warren Buffett said: “When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is usually the reputation of the business that remains intact.”
The wealth management businesses of major banks may be efficient uses of their capital, but it comes with scrutiny of the vertical integration model and culture risks. There’s increasing focus on whether it’s worth having.
The major banks and other large companies attract a lot of attention when they report profits of billions of dollars, but other measures of profitability show the big headline figures can be misleading.
It’s surprising to learn that only 25% of Australian listed companies are actually profitable. Whether you favour fundamental or technical analysis or both, how do you find and invest in cheap, good quality companies?