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Investors Brace for a Decline in Valuation Multiples

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Investors Brace for a Decline in Valuation Multiples

Boston Consulting Group,

5 min read
5 take-aways
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What's inside?

Investor nervousness about valuation multiples can have profound implications for companies.

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After a long bull market, an increasing number of portfolio managers and analysts are worried about valuations, according to this survey by Jeffrey Kotzen, Tim Nolan and Frank Plaschke of the Boston Consulting Group. Investors reveal their expectations for stock market valuations and shareholder returns in 2014, which hold some lessons for executives on striking the right balance between hitting short-term goals and increasing long-term company value. getAbstract recommends this brief report to investment professionals, corporate managers and investors for its insights on prospects for stocks and corporate growth.


After unusually robust returns for equity markets around the world since 2012, portfolio managers and analysts expect lower valuation multiples and more modest total shareholder returns (TSR) in 2014. In a 2014 survey, 36% of respondents – the highest number since 2009 – reported their belief that the market is overvalued, compared to just 10% in 2013. Only 3% see undervaluation in the market, compared to 23% in 2013. Respondents feel valuation multiples will slide in 2014, based on their estimates of dividend yield and share repurchases, TSR, and earnings growth. On average, ...

About the Authors

Jeffrey Kotzen is a senior partner and managing director at Boston Consulting Group, where Tim Nolan and Frank Plaschke are partners and managing directors.

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