EPS Growth

Over time, the underlying earnings-per-share growth of our portfolio companies should be the principal driver of our investment results.

THE CONNECTION BETWEEN EARNINGS AND VALUE

A share represents an ownership interest in a business. As a company grows its earnings per share, its ability to generate cash, reinvest, repurchase shares and distribute capital also grows. If EPS compounds over many years, intrinsic value should generally rise with it.

WHY SHARE PRICES CAN TELL A DIFFERENT STORY IN THE SHORT TERM

A stock price reflects both earnings and the valuation multiple investors assign to those earnings. Sentiment, interest rates and temporary uncertainty can cause that multiple to rise or fall. A company can therefore make strong operating progress while its share price declines. Over longer periods, sustained earnings growth becomes increasingly important.

WHAT CIANCA CAPITAL LOOKS FOR

• Durable earnings growth supported by competitive advantages and long reinvestment runways.

• Intelligent capital allocation focused on increasing value per share.

• Financially resilient businesses with sound balance sheets.

• A purchase price below intrinsic value, providing a margin of safety.

OUR LONG-TERM PERSPECTIVE

We do not expect stock prices to move in a straight line, nor do we treat short-term price performance as a complete measure of investment progress. Our focus is whether our portfolio companies are strengthening their competitive positions and increasing earnings per share. When those fundamentals develop as expected, time and patience can become powerful sources of return.

In the short term, prices can be driven by changing expectations. In the long term, investment results depend primarily on the economic progress of the businesses we own.

Important information: This material is for informational purposes only and does not constitute investment advice, an offer or a solicitation. EPS growth and increases in intrinsic value are not guaranteed. All investments involve risk, including the possible loss of principal.