Price Changes of common stocks with highly stable earnings.

The stability of annual earnings per share of a selected common stock is extraordinary.  

Record of earnings and dividends of S.H. Kress for 1924 - 45 and the more extreme price variations during that period.

In 16 out of 22 years, the earnings per share varied only between $1.93 and $2.32.  In the other 6, including the boom and deepest depression years, the range widened only to $1.38 - $2.88.

It may properly be concluded that this record at no point showed any definite indications of permanent change for either the better or the worse in the company's affairs or prospects.

Hence the variation in market price must have been entirely psychological in their origin.  They offer a fairly accurate measurement of the breadth of price change a scribble to the mere vagaries of the stock market - while the "article valued" changed its character not at all.

Under the circumstances, the range of price changes must be considered extraordinary.

It's price rose from 12 to 62, a fall to 9, a rise to 48, a fall to 20, and a rise to 49.   For the 5 years 1933 - 37 the earnings varied between $2.11 and $2.31 per share, whereas the price ranged from 13 1/2 to 47 1/2.  In the 6 years 1939- 45 the earnings varied between $1.93 and $2.25, but the price ranged from 19 1/2 to 40 1/2.


Reference
The Intelligent Investor, by Benjamin Graham