The P/E Ratio: A User's Manual
Actively Speaking Podcast
What's the Trade-Off Between Cash Flow and Future Growth?
There's an inherent trade-off between cash flow today versus growth in the future. People will often use a line of argument like, well, this company has traditionally or historically anyway traded between say 16 and 19 times earnings. Today it's trading at 14 times earnings. And so therefore it is cheap because there's an implicit assumption there that nothing has actually changed that should make the company trade at a lower multiple.
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