A 90x P/E stock compounding at 45% remains an attractive investment
Brian Christensen · Brian Christiansen – High-Conviction Growth Investing at Sands Capital (EP.361) · Jan 11, 2024 · at 19:17
Brian Christensen, Senior Portfolio Manager at Sands Capital, explains how high multiple valuations should be evaluated against long-term earnings growth rates.
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“If it's a 90 times PE company that's growing earnings only 10%, it's really hard to make the math work long term. But if it's a company that can compound earnings at 45% over the next five years, that can actually be very, very attractive. In an expected return framework, even if you bake in meaningful multiple compression over the next five years.”
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