Revenue and Earnings: Fundamentals Based on the Operating StatementP/E ratio without studying the longer-term trend, you cannot truly appreciate the significance of the current revenue and earnings without seeing how the trend has moved over a decade.
Tracking revenue and earnings is not just a matter of making sure that the numbers rise every year. You look for true growth, meaning that the dollar value of revenues and the dollar value of net earnings both rise each year.
Referring to the two previously cited companies as examples of the trend in P/E ratio, you can also track revenue and earnings trends over the same period. Figure below summarizes the General Mills (GIS) record of the operating results for a decade.
[caption id="attachment_12695" align="aligncenter" width="510"](GIS) Revenue and earnings, 10 years: General Mills (GIS).[/caption]
By Michael C. Thomsett