Timing is important | GSK Consumer India – 10 years of negative returns
Discipline of not buying for months, years, decades unless the price is right instead of buying it at the lowest possible price.
GSK is 130 Billion USD company globally even bigger than Unilever in terms of market cap. It dominates product niches yet what did GSK Consumer return between 1999 – 2009 ? negative 25% as opposed to Sensex returns of 600%.
10 Years of no growth in share price
10 Years of below average growth in earnings
4 years of mediocre growth
Since 2009, no wonders have been accomplished. A mediocre 18% CAGR of sales. Extreme shortage of ideas, desperation amongst investors led to PE rerating to 40 times earnings. EPS in the past 4 years has only doubled yet the stock returned 8 fold.
So, making abnormal amounts money has three possible dimensions, EPS growth, PE re-rating and a potentially favourable exchange rate. First two are almost a requirement.