what's happening with rcr?, page-17

Sorry to reinvigorate this thread since technically the argument is moot now that you have stated this is a short term trade for you - however I couldnt help myself!...

Originally posted by March09:

"To me its not only the strength of the company, but has to include the relationship between forward earnings (as a measure of the performance of the company) and the share price, being the cost of buying into that performance."

I just realised the irony of this statement considering your point view - I would ask you: What drives the forward earnings of the company?

Put it this way, the analysts forecast increase in Earnings for RCR that you give, is 7%. Which just happens to be the same as RCR's historical return on equity.

Hmm...

So, the strength of the company drives forward earnings. And as it is fair to pay more for a company that has the ability to grow forward earnings at a higher rate, the fundamentals that you dismiss as only half the story, are IMPLICITLY the single most important factor in determining both halfs.


Cheers
Sauce