Thursday 20 November 2014

Look for Consistency

The chart below show the Earnings Per Share of AG Barr and Britvic - two firms within the Beverage Sector of the FTSE 250 Index - at first glance you may be attracted to considering the higher Earnings Per Share of Britvic, and even more so when we tell you the earnings per share for Britvic has risen 35% of the last three years when compared to 24% for AG Barr; however……………………….



However look back over 10 years and AG Barr has shown more consistency with only one year when the earnings per share was lower than a previous year (in comparison to four years for Britvic). Whilst Britvic saw  its EPS rise by 58% over the next 10 years AG Barr enjoyed earning growth of almost 204%. The    results can be seen in the share price change since 2005 with AG Barr outperforming strongly as investors were willing to pay for the consistency in earnings . Remember we are looking back at this and how the earnings helped justify a higher price and how this could be applied to different scenarios rather than a recommendation on the suitability of either of these shares



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