Do Stock Prices Reflect Growth Forecasts?

30 Pages Posted: 5 Nov 2012

See all articles by Pascal Alphonse

Pascal Alphonse

University of Lille 2 - ESA

Michel Levasseur

University of Lille II

Date Written: January 1, 2012


In this paper we propose a new analysis of the association between the growth of the earnings per share (EPS) as reflected in analysts’ forecasts, the book value of equity, the EPS and the market value of equity. Specifically, we motivate and introduce a new specification of the dynamics of the growth in EPS and test its implications in equity valuation. Our empirical results support the predictions of the valuation model and appear consistent with the time varying level of association between the stock prices, the EPS and the growth in EPS.

Keywords: EPS, stock valuation, Book value of equity, Growth, Earnings forecasts

Suggested Citation

Alphonse, Pascal and Levasseur, Michel G., Do Stock Prices Reflect Growth Forecasts? (January 1, 2012). 29th International Conference of the French Finance Association (AFFI) 2012 . Available at SSRN: or

Pascal Alphonse (Contact Author)

University of Lille 2 - ESA ( email )

1 Place Deliot
BP 31
59020 Lille Cedex

Michel G. Levasseur

University of Lille II ( email )

Lille Cedex, 59020

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