Richard Warr Looks at the Impact of Inflation on Earnings Growth Rates
A new study has emerged to counter the common narrative that value stocks do better when inflation is running hottest. Richard Warr, associate dean for faculty and research, finds that though inflation lowers present earnings, future earnings and cash flows will most likely be higher when inflation heats up.
“These two factors should balance out,” said Warr. “Which is why value’s historical advantage over growth shouldn’t be dependent on inflation.”
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