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Investors Brace for a Decline in Valuation Multiples
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Investors Brace for a Decline in Valuation Multiples

Jeffrey Kotzen, Tim Nolan and Frank Plasche
Boston Consulting Group, 2014
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Editorial Rating

7

Qualities

  • Innovative
  • Scientific
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Recommendation

After a long bull market, an increasing number of portfolio managers and analysts are worried about valuations, according to this survey by Jeffrey Kotzen, Tim Nolan and Frank Plaschke of the Boston Consulting Group. Investors reveal their expectations for stock market valuations and shareholder returns in 2014, which hold some lessons for executives on striking the right balance between hitting short-term goals and increasing long-term company value. getAbstract recommends this brief report to investment professionals, corporate managers and investors for its insights on prospects for stocks and corporate growth.

Take-Aways

  • In a 2014 survey of portfolio managers and analysts, 36% of respondents – the highest number since 2009 – believe the S&P 500 market is overvalued, compared to only 10% in 2013.
  • Survey respondents also believe valuation multiples will slide in 2014, according to their estimates of dividend yield and share repurchases, total shareholder return, and earnings growth.
  • Respondents are changing their views on how companies should create long-term value and deploy capital. In 2013, 80% of respondents agreed that the “short term should not dominate” such decisions, compared with just 70% in 2014.

About the Authors

Jeffrey Kotzen is a senior partner and managing director at Boston Consulting Group, where Tim Nolan and Frank Plaschke are partners and managing directors.

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