Invesco Canada blog

Insights, commentary and investing expertise

When valuing businesses, cash flows matter more than forward multiples


Senior Portfolio Manager, Invesco Canada Equity team
July 16, 2020

Subject | Active management

During a recent webinar, I was asked whether we have enough real data to see what forward P/E multiples look like, or whether the market is just ‘guessing.’ This is an interesting question that highlights a very important point when it comes to valuing businesses.  It highlights the danger of using forward multiples to evaluate long term intrinsic value1.  Significant business disruption, either as a result of the current pandemic or an abrupt downturn leading to a recession (think Global Financial Crisis) can significantly impact forward P/Es.  However, these events do not have the same impact on the intrinsic value of a high-quality business.  The key distinction is that forward P/Es rely on one year of earnings while a company’s intrinsic value is a function of all of its future cash flows.

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Tactical Asset Allocation – July 2020


Senior Portfolio Manager, Invesco Investment Solutions
July 14, 2020

Subject | Active management | Macro views

Our macro regime framework continues to indicate the global economy is likely moving into a recovery regime, confirming our expectation of an inflection in the business cycle. By and large, recent global economic data releases have shown signs of stabilization as most economies have begun the reopening process. Over the past two months, indicators from consumer confidence to retail sales, business surveys and industrial orders suggest modest improvements off the bottom readings registered in April when the most stringent lockdown measures were in effect. The improvement in economic data is most apparent in Asia, particularly in China, where evidence of an economic recovery is emerging across several parts of the economy, such as housing, industrial orders and production, money and credit growth. Emerging markets outside of Asia are still lagging, reflecting the most recent contagion waves in Latin America and Russia (Figure 1).

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Expectations diverge for economic recovery in the US and China


Global Market Strategist, Invesco Ltd.
July 13, 2020

Subject | Coronavirus impact | Institutional | Macro views

Last week, we saw increases in both the Chinese and U.S. stock markets. But that’s where the similarities end — there is currently a meaningful difference in market confidence for the prospects for longer-term economic recovery.

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Your International equity questions answered


Senior Portfolio Manager, Invesco Ltd.
July 9, 2020

Subject | Active management | Your questions answered

I recently participated in a webinar, providing my views on the international equity space. As a member of the Invesco International and Global Growth team, I look at companies on an individual basis, focusing my analysis on their earnings, quality and valuation (EQV).

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How long can economic data improve while infections continue to spread?


Global Market Strategist, Invesco Ltd.
July 6, 2020

Subject | Coronavirus impact | Institutional | Macro views

The U.S. jobs report and Purchasing Managers’ Index data both improved in June, but rising infections remain a critical concern. I would not be surprised to see those numbers slip back in the coming months if policymakers become complacent. In my view, more fiscal stimulus is clearly needed as some companies continue to announce layoffs and file for bankruptcies while others are voluntarily re-closing stores.

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