In today’s briefing:
- How Long Will the Escape from Deflation Be a Greater Factor in Stock Price Rises than ROE?
How Long Will the Escape from Deflation Be a Greater Factor in Stock Price Rises than ROE?
- Net profit per listed company increased 4.4 times over the 33 years from 1989 to 2023, which means only a modest 4.5% annual growth.
- The reason why ROE has been sluggish since FY 2005 is due to the slow growth of Net Profit Margin, the decline of Asset Turnover, and the flat financial leverage.
- When the escape from deflation becomes a reality, the key is to have products ready to pass on prices, and defense by cash alone is not sufficient for this purpose.
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