These EMS stocks always trade at high PE multiples. Returns can only come through earnings growth. Rerating potential is almost zero in such companies. You mentioned switching cost is there, i think this is the reason why market gives high multiple to such companies.
Yep, and the way for earnings growth is by growing the top-line, because these companies operate on a cost plus model and cannot increase their service fee that easily.
These EMS stocks always trade at high PE multiples. Returns can only come through earnings growth. Rerating potential is almost zero in such companies. You mentioned switching cost is there, i think this is the reason why market gives high multiple to such companies.
Yep, and the way for earnings growth is by growing the top-line, because these companies operate on a cost plus model and cannot increase their service fee that easily.