The EPS Growth Rate Diversification Report shows all of the stocks that the club holds, based on the most recent valuation report.
At the top of the EPS Growth Rate Diversification Report, we show the "Weighted Average EPS Growth Rate for Portfolio." This is calculated from the "Projected EPS Growth Rate" that is shown on the report, adjusted for the percentage of each holding as part of the entire portfolio.
The Projected EPS Growth Rates for each company on the report come from a member's linked SSG Plus stock study if available. If no SSG Plus study has been linked, we use analysts consensus estimates (ACE) of long-term growth from Morningstar. If no such estimate is available, we use our internal Take Stock estimate of growth. For best results, all companies should be linked to a BetterInvesting stock study and studies updated regularly.
For a growth-driven portfolio strategy, the primary objective of total return is capital appreciation, which is directly linked to the fundamental growth of sales and earnings over time. For this reason, a portfolio should be constructed to provide lots of potential for future earnings per share growth, typically no less than 7%-10% a year. From this level of capital appreciation, dividends and expansion of P/E ratios (from purchasing securities at below-average valuations as measured by P/E ratios) can drive additional returns to meet the returns of the overall market over time (the long-term return of the S&P 500 is around 10%-12% annually). To exceed the market's average return, faster EPS growth is thus required from a portfolio; slower-growing companies may not deliver enough return to support the portfolio's growth objectives.
The report shows information both as pure text, and in a graphic format, dividing the club's holdings into Estimated EPS Growth ranges of under 7%, between 7 and 12 %, over 12%, and Unknown, for cases where the system does not recognize, or does not have enough information to make a growth estimate.
Historically these ranges can be used to help a club estimate if the expected growth for a company is reasonable based on the idea that smaller companies should be expected to grow at over 12%, medium or mid-sized companies should be around 7-12%, and larger companies shouldn't be expected to produce more than 7% growth
The text portion is divided into Six columns, and three or four Rows, as follows:
The first column is Projected EPS Growth Rate, which is divided into rows for general growth under 7%, between 7 and 12 %, over 12%, and Unknown, for cases where the system does not recognize, or does not have enough information to make a growth estimate.
The second column, Company is simply the name of the company.
The third column, TTM Revs ($B), gives the Trailing Twelve Month Revenue, in Billions.
The fourth column, Projected EPS Growth Rate, shows the Projected growth for each company in a given section, from low to high.
If a club member's stock study is linked from the BetterInvesting SSGPlus tool, the report will take the projected growth rate from there. If there is no linked study, we will show the Analysis Consensus Estimate (ACE) for long-term growth, indicated by a single asterisk (*). If no ACE is available for the company, we make some automated judgments based on the company's historical performance, indicated by a double asterisk (**)..
The fifth column, Market Value, shows the market value for each stock, for each section, and for all securities in the club.
The sixth column, Percent, shows the percent of the total security value for each stock, for each section, and for all securities in the club.
The graphic portion of the report is organized as a circle, with two separate rings.
The inner ring is divided into growth under 7%, between 7 and 12 %, over 12%, and Unknown. The pieces of the inner ring are sized to correspond to the percent of the portfolio made up of each of the projected EPS Growth rate ranges.
The outer ring shows the percent of the portfolio value for each stock, in the given section.
In the graphic portion of the report, placing the pointer over any section will show a pop-up of that section, with the total percent for the area that the pointer is hovering over.
