Tuesday, October 12, 2010

Real Implied Growth Rate: Understanding Market Expectations

Real Implied Growth Rate (RIGR) reveals market expectations for long-term earnings growth implied in an individual firm’s stock price. Comparing RIGR for a single firm to the overall market and its industry can help investors identify over and undervalued firms and sectors. This analysis reveals dismal growth expectations for Microsoft (Nasdaq: MSFT) with an expected long-term decline putting Microsoft in the bottom 11% of S&P 500 companies. Is that reasonable?


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