I read all the time how a company’s stock price takes a hit because it didn’t grow as much as hoped or, even worse, its growth remained flat in a given quarter or year. But if a company has say $100M in revenue and $20M in profits (for example) and then does that year after year, why isn’t that viewed as fantastic? What’s wrong with having consistent revenue (and profits) year after year? Why does the market seem to demand growth? If I owned a company that had great sales and profits every year I imagine I’d be quite happy about it.
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They don’t. Only “growth” companies must do this. Growth companies must show year after year growth because they aren’t paying any dividends now. They are foregoing paying investors dividends now in exchange for higher dividends later. If the company doesn’t show it is growing (so it can deliver those dividends later ) then investors will devalue it.
Many companies aren’t growth companies but they are generally in more stable industries. Energy, Utilities, Food, Vehicles, etc.
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