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Time to Buy These 4 Stocks with Multi-Decade Earnings Growth?
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George Soros famously said, “If investing is entertaining, if you’re having fun, you’re probably not making any money.” Steady can sometimes be boring, but in investing, boring is profitable.
Stocks that have been steadily growing their earnings year after year can sometime lack excitement, but consistently growing earnings is one of the best indicators when picking long-term winning stocks.
Adobe (ADBE - Free Report) , McDonald’s (MCD - Free Report) , Pepsi (PEP - Free Report) and Procter and Gamble (PG - Free Report) have all been steadily growing their earnings over the past 25 years and have experienced exceptional stock performance over that time. Additionally, each of these stocks have high Zacks Ranks, suggesting strong near-term expectations for their stocks.
Image Source: Zacks Investment Research
McDonald’s
McDonald’s is a leading fast-food chain that currently operates more than 39,000 restaurants in more than 100 countries. The company mainly operates and franchises quick-service restaurants (QSRs) under the McDonald’s brand.
Nearly 93% of the company’s restaurants worldwide are owned and operated by independent local businesspeople. MCD’s revenues include sales by company-operated restaurants but primarily come in the form of franchise fees from the independently managed restaurants.
Earnings have grown at a very stable and impressive rate from just $1.40 per share in 1999 to $10.45 per share today. That’s a CAGR of 8%. Because of its business model, MCD essentially charges rent to its restaurant owners and collects a franchise fee. This has been a very successful and enduring strategy.
Image Source: Zacks Investment Research
McDonald's currently boasts a Zacks Rank #2 (Buy), indicating upward trending earnings revisions. Current quarter earnings have been revised higher by 4% and are expected to grow 8% YoY. FY23 earnings have been upgraded by 5% and are projected to grow 9.3% YoY.
Image Source: Zacks Investment Research
Adobe
Adobe is one of the largest software companies in the world collecting licensing fees from customers, which form the bulk of its revenue. ADBE also offers technical support and education, which accounts for the balance.
Not only have ADBE earnings grown steadily, but they have accelerated considerably in the last decade, forming the always desirable hockey stick chart. Adobe’s EPS have compounded at a ridiculous 14.4% annually over the last 25 years and its stock has appreciated over 9,000% over that period.
Image Source: Zacks Investment Research
Adobe currently enjoys a Zacks Rank #2 (Buy) reflecting upward trending earnings revisions. EPS is expected to grow 13.3% annually over the 3-5 years, in line with its long-term average, which is remarkable considering how large a company it is today.
ADBE is trading at a one-year forward earnings multiple of 39x, which is just above the industry average of 33x, and a bit above its 25-year median of 34x.
Image Source: Zacks Investment Research
PepsiCo
PepsiCo is one of the leading global food and beverage companies. Its complementary brands include Frito-Lay snacks, Pepsi-Cola beverages, Gatorade sports drinks, Tropicana juices and Quaker foods. The company serves customers in more than 200 countries and territories.
Earnings growth in PEP is about the smoothest up trending line in finance that I have seen. Over the last 25 years annual EPS have grown from $1.21 per share to $7.00 per share, which is a CAGR of 7.3%.
Additionally, over the last 20 years, PEP has reduced its share count by 20% through persistent share buyback programs. This has further ensured upward movement in the stock.
Image Source: Zacks Investment Research
Making PepsiCo an even more compelling investment is its generous dividend, which yields 2.8%. Pepsi has increased its dividend every single year for the last 50 years, making it one of the very prestigious dividend king stocks. Over the last five years the dividend has been increased by 5.4% annually.
Image Source: Zacks Investment Research
Procter and Gamble
Procter & Gamble is a multinational consumer goods behemoth that has established itself as a global leader in its industry. With a rich history spanning over 180 years, PG has built a reputation for delivering high-quality products and brands that are household names worldwide. The company operates across multiple categories, including beauty, grooming, healthcare, fabric and home care, and baby care, with a diverse portfolio of well-known brands such as Gillette, Pampers, Crest, and Tide, among others.
With a consistently growing portfolio of household products, as well as top-notch execution over decades, PG has built an impressive record of growing earnings.
Procter and Gamble currently earns a Zacks Rank #2 (Buy), indicating upward trending earnings revisions. Current quarter earnings are projected to grow 9% YoY, while sales are projected to grow 2.3% over the same period. FY23 earnings are expected to increase just 1% YoY, however FY24 is expected to resume growth, with estimates of an 8.3% YoY increase.
Image Source: Zacks Investment Research
If consistently growing earnings wasn’t enough to guarantee stock appreciation PG also has the strong tendency to return huge amounts of cash to shareholders. Though stock buybacks management has decreased share count by 17% over the last 15 years.
Furthermore, the company offers a dividend yield of 2.6%, which it has increased by an average of 6.3% annually over the last five years. Procter and Gamble has paid a dividend for 132 years and has increased the dividend payment consecutively for 66 years.
Image Source: Zacks Investment Research
Bottom Line
Investing in stocks with a long-term trend of growing earnings per share can be a prudent strategy for investors seeking sustainable growth in their portfolios. By identifying companies that consistently improve their earnings over time, investors can potentially benefit from the compounding effect and capitalize on the long-term value creation.
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Time to Buy These 4 Stocks with Multi-Decade Earnings Growth?
George Soros famously said, “If investing is entertaining, if you’re having fun, you’re probably not making any money.” Steady can sometimes be boring, but in investing, boring is profitable.
Stocks that have been steadily growing their earnings year after year can sometime lack excitement, but consistently growing earnings is one of the best indicators when picking long-term winning stocks.
Adobe (ADBE - Free Report) , McDonald’s (MCD - Free Report) , Pepsi (PEP - Free Report) and Procter and Gamble (PG - Free Report) have all been steadily growing their earnings over the past 25 years and have experienced exceptional stock performance over that time. Additionally, each of these stocks have high Zacks Ranks, suggesting strong near-term expectations for their stocks.
Image Source: Zacks Investment Research
McDonald’s
McDonald’s is a leading fast-food chain that currently operates more than 39,000 restaurants in more than 100 countries. The company mainly operates and franchises quick-service restaurants (QSRs) under the McDonald’s brand.
Nearly 93% of the company’s restaurants worldwide are owned and operated by independent local businesspeople. MCD’s revenues include sales by company-operated restaurants but primarily come in the form of franchise fees from the independently managed restaurants.
Earnings have grown at a very stable and impressive rate from just $1.40 per share in 1999 to $10.45 per share today. That’s a CAGR of 8%. Because of its business model, MCD essentially charges rent to its restaurant owners and collects a franchise fee. This has been a very successful and enduring strategy.
Image Source: Zacks Investment Research
McDonald's currently boasts a Zacks Rank #2 (Buy), indicating upward trending earnings revisions. Current quarter earnings have been revised higher by 4% and are expected to grow 8% YoY. FY23 earnings have been upgraded by 5% and are projected to grow 9.3% YoY.
Image Source: Zacks Investment Research
Adobe
Adobe is one of the largest software companies in the world collecting licensing fees from customers, which form the bulk of its revenue. ADBE also offers technical support and education, which accounts for the balance.
Not only have ADBE earnings grown steadily, but they have accelerated considerably in the last decade, forming the always desirable hockey stick chart. Adobe’s EPS have compounded at a ridiculous 14.4% annually over the last 25 years and its stock has appreciated over 9,000% over that period.
Image Source: Zacks Investment Research
Adobe currently enjoys a Zacks Rank #2 (Buy) reflecting upward trending earnings revisions. EPS is expected to grow 13.3% annually over the 3-5 years, in line with its long-term average, which is remarkable considering how large a company it is today.
ADBE is trading at a one-year forward earnings multiple of 39x, which is just above the industry average of 33x, and a bit above its 25-year median of 34x.
Image Source: Zacks Investment Research
PepsiCo
PepsiCo is one of the leading global food and beverage companies. Its complementary brands include Frito-Lay snacks, Pepsi-Cola beverages, Gatorade sports drinks, Tropicana juices and Quaker foods. The company serves customers in more than 200 countries and territories.
Earnings growth in PEP is about the smoothest up trending line in finance that I have seen. Over the last 25 years annual EPS have grown from $1.21 per share to $7.00 per share, which is a CAGR of 7.3%.
Additionally, over the last 20 years, PEP has reduced its share count by 20% through persistent share buyback programs. This has further ensured upward movement in the stock.
Image Source: Zacks Investment Research
Making PepsiCo an even more compelling investment is its generous dividend, which yields 2.8%. Pepsi has increased its dividend every single year for the last 50 years, making it one of the very prestigious dividend king stocks. Over the last five years the dividend has been increased by 5.4% annually.
Image Source: Zacks Investment Research
Procter and Gamble
Procter & Gamble is a multinational consumer goods behemoth that has established itself as a global leader in its industry. With a rich history spanning over 180 years, PG has built a reputation for delivering high-quality products and brands that are household names worldwide. The company operates across multiple categories, including beauty, grooming, healthcare, fabric and home care, and baby care, with a diverse portfolio of well-known brands such as Gillette, Pampers, Crest, and Tide, among others.
With a consistently growing portfolio of household products, as well as top-notch execution over decades, PG has built an impressive record of growing earnings.
Procter and Gamble currently earns a Zacks Rank #2 (Buy), indicating upward trending earnings revisions. Current quarter earnings are projected to grow 9% YoY, while sales are projected to grow 2.3% over the same period. FY23 earnings are expected to increase just 1% YoY, however FY24 is expected to resume growth, with estimates of an 8.3% YoY increase.
Image Source: Zacks Investment Research
If consistently growing earnings wasn’t enough to guarantee stock appreciation PG also has the strong tendency to return huge amounts of cash to shareholders. Though stock buybacks management has decreased share count by 17% over the last 15 years.
Furthermore, the company offers a dividend yield of 2.6%, which it has increased by an average of 6.3% annually over the last five years. Procter and Gamble has paid a dividend for 132 years and has increased the dividend payment consecutively for 66 years.
Image Source: Zacks Investment Research
Bottom Line
Investing in stocks with a long-term trend of growing earnings per share can be a prudent strategy for investors seeking sustainable growth in their portfolios. By identifying companies that consistently improve their earnings over time, investors can potentially benefit from the compounding effect and capitalize on the long-term value creation.