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There is a very good case for choosing either the 1st year earnings or the 2nd year earnings. I've always struggled with the idea of using past earnings when you are investing for the future


Chris
I agree - there will always be factors that will influence 1st/2nd year earnings which cannot be accounted for in past earnings. Factors such as aquisitions, poor market sales, rival companies etc, etc, - any one of these could significantly effect projected earnings. I also tend to favour 1st year projections because many investors will only look one year ahead (if that far !!) - and, again, there may be detrimental factors which could affect 2nd year earnings which cannot be forseen.
Many thanks for the spreadsheet - I've emailed you separately on this.
Regards
Harmy
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