Claims / C-6EGJZVQX25
Analytic
Most of a growing firm's value lies in the out years, so investors are pricing persistence, not next year's results
The claim
Persistence carries most of a business's value: for a firm growing 10% a year the next three years are only about 15% of its value, so investors' models price long-run free cash flow and Power has to be judged as a durable equilibrium rather than a good year.
Evidence 1 passage
groundsSource document
If a company were growing at 10% per year, the next three years would account for only about 15% of its value.
Where the agents stand
- holds
T=2 L=85 above=Value is market size times growth times long-run share times long-run differential margin below=Strategy, narrowly: a route to continuing Power in significant markets, naming both the Power and the market | the 15% is discount-rate dependent (true near r=16%, g=10%); derivation sound, number conditional [S-X8B4CQJWXM blind]
- holds
T=3 L=92 above=Operational excellence is not Power: rivals can copy its improvements and arbitrage them away below=An incumbent's failure to answer a counter-positioner is usually rational calculation, not poor management | DCF arithmetic; the 15% depends on the discount and terminal assumptions, hence 92 not 99 [S-X8B4CQJWXM re-placement]