The Need to Focus on Organic Revenue Growth to Drive Shareholder Value

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U.S. companies must maintain focus on organic revenue growth to deliver leading shareholder returns. Treacy & Company’s new whitepaper, “The Need to Focus on Organic Revenue Growth to Drive Shareholder Value,” describes how to rebuild the growth capabilities that so many companies have lost through the cost cutting efforts of the past several years, and deliver leading shareholder value.

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The most influential financial driver of shareholder value delivery is not cost or efficiency, but organic revenue growth.

Business leaders have responded to past economic challenges by reducing costs through aggressive layoffs, divestitures, and a methodical approach to efficiency building. While these disciplines have been effective in delivering quick operating margin improvements, many companies have found that these efforts have had a diminishing impact on their stock prices. To understand why, Treacy & Company has analyzed the drivers of shareholder value for nearly 500 companies representing all sectors of the U.S. economy. The objective was to understand the nature of the relationship between operating efficiency improvements and shareholder value creation.

Research revealed that, across all sectors, operating margin improvement has only a modest correlation with stock returns. The most influential financial driver of shareholder value delivery is not cost or efficiency, but organic revenue growth.

To read Treacy & Company’s white paper “The Need to Focus on Organic Revenue Growth to Drive Shareholder Value”, please visit the Treacy & Company website here.

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James Potter
Treacy & Company

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