EPS - EPS: Exploring The Drawbacks Of Earnings-Based Investing
2023-03-28 00:35:22 ET
Summary
- EPS selects 500 of the largest U.S. companies, weighting them by aggregate earnings over the last four fiscal quarters. Expenses are 0.08% and the fund has $645 million in assets.
- Despite a seemingly common sense approach, EPS has consistently lagged SPY since its launch 16 years ago. One possible reason is that its Index doesn't consider any forward-looking metrics.
- This feature is evident when analyzing EPS's fundamentals against SPY. Estimated growth rates are lower across the board, though historical growth rates were better.
- Investors are compensated through a lower valuation based on earnings and cash flow. However, most other key metrics are too similar for there to be a serious opportunity.
- I'm reiterating my neutral position on EPS but will suggest a more value-oriented ETF worth consideration.
For further details see:
EPS: Exploring The Drawbacks Of Earnings-Based Investing