Salient to Investors:
A Bernstein Research study “Do High R&D Spenders in Tech Generate Stock Outperformance?” found:
- Over 1, 3, 5, and 10-year periods, the companies with the lowest spending on R&D tended to perform the best on Wall Street.
- Over the past 5 years, stocks in the biggest R&D spenders underperformed by 15 percent on average. The middle R&D spenders outperformed by 23 percent on average, while the lowest spenders outperformed the rest by 19 percent.
- 63 percent of the low spender, 43% of the middle spenders, and 40 percent of the high spenders outperformed their peers.
- Chip companies suffer from being locked in a constant battle with the laws of physics to build tinier, faster, cheaper things to compete.
- Many of the high R&D spenders were underdogs trying to compete above their weight.
- Large companies can spend less but make more of their R&D investments through high R&D productivity.
Read the full article at http://www.businessweek.com/articles/2014-07-09/proof-investors-love-tech-companies-that-skimp-on-r-and-d#r=rss
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