Market price of any stock is a function of two factors: earnings per share (EPS) and its price to earnings (PE) ratio. Movement in these two variables is, in turn, dependent on various factors. If a company’s earnings grow, assuming the PE stays constant, its market price will increase.
Similarly, even if the earnings of a company remains stagnant, the stock price can still increase on the back of expansion in PE multiples.
6 equity mutual funds offer over 25% CAGR in five years
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