Series 79 practice questionmediumIndustry/Sector Analysis
Which factor would most likely justify a higher trading multiple for one payments company versus another?
- AA lower-quality management presentation
- BHigher organic growth with similar margins and lower customer concentration✓ Correct answer
- CAn older headquarters building
- DA shorter trading history on the NYSE
Explanation
Why B — Higher organic growth with similar margins and lower customer concentration
Higher organic growth with similar margins and lower customer concentration Higher sustainable growth and lower concentration risk improve the quality and predictability of future cash flows. The market usually rewards those advantages with a higher valuation multiple when all else is reasonably similar.
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