US tech investors increasingly value earnings over sales growth.
The focus on corporate profitability instead of ‘growth at-all costs’ has gained wide acceptance in the innovation economy. In this paper we present evidence of stock price outperformance for small-capitalization technology companies growing earnings faster than revenues.
Key takeaways
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Active management of currencies is an important lever to pull for companies with a renewed focus on earnings.
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Balance-sheet hedging programs aim at protecting current period earnings, while cash flow programs insulate future earnings.
