What to look for: Growth

Important attributes to look for in an earnings statement - GROWTH

After all is said and done, the long-term growth of a stock price is driven by growth in the business.

Growth in the business means growth in the earnings - there is no other way to sustain business growth without infusions of additional owner capital.

Sure, you can acquire, merge, or sell more stocks to make a business larger by common definitions, but has the business really "grown"?

The value investor works to obtain a deep understanding of business growth, growth trends, and the quality of growth.

• Is reported growth based on internal core competencies?
• Or is it acquired or speculative growth based on unproven ventures?

The value investor assesses growth and growth patterns, judges the validity of growth reported, and attempts to project the future.

A business' ability to grow on its own, through its own success and resulting earnings, is known as organic growth.

Growth through acquisition or other capital infusions are not "organic" and thus does not suggest growth in true business value.