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No title — Strong revenue growth boosted by contract wins

No title — Strong revenue growth boosted by contract wins

Eddie Stobart Logistics (ESL) published its H1 results on 30 August, reporting 25% revenue growth, including 10% organic. Organic growth was boosted by a higher than average level of contract wins and a good performance from the e-commerce division. A flip side of the contract wins was that they incurred network reoptimisation costs and this was the main reason that the EBIT margin declined from 5.9% to 5.0%. Management maintained full-year guidance.

Analyst avatar placeholder

Written by

Eddie Stobart Logistics

Strong revenue growth boosted by contract wins

H118 results

General industrials

5 September 2018

Price

126p

Market cap

£478m

Net debt (£m) at end November 2017

109.5

Shares in issue

379.3m

Free float

72.5%

Code

ESL

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(7.0)

(10.6)

(21.3)

Rel (local)

(4.9)

(7.5)

(22.3)

52-week high/low

160p

123p

Business description

Eddie Stobart Logistics is a market leader in end-to-end, multi-modal transport and logistics. Operations are primarily focused in the UK with some activities in mainland Europe. Key customer segments include retail, consumer, industrials and increasingly, e-commerce.

Next events

FY pre-close

November 2018

Analyst

Robert Plant

+44 (0)20 3077 5700

Eddie Stobart Logistics is a research client of Edison Investment Research Limited

Eddie Stobart Logistics (ESL) published its H1 results on 30 August, reporting 25% revenue growth, including 10% organic. Organic growth was boosted by a higher than average level of contract wins and a good performance from the e-commerce division. A flip side of the contract wins was that they incurred network reoptimisation costs and this was the main reason that the EBIT margin declined from 5.9% to 5.0%. Management maintained full-year guidance.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

11/16

570.2

24.0

7.9

N/A

16.0

N/A

11/17

623.9

37.8

9.8

5.8

12.9

4.6

11/18e

780.2

51.3

12.1

6.1

10.4

4.8

11/19e

910.1

61.5

13.4

6.7

9.4

5.3

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Revenue boosted by contract wins

ESL achieved 25% revenue growth, including 10% organic, in H1. Management believes that the 10% organic growth is above the UK logistics market. We thought the main point of interest from the H1 results was ESL’s high level of contract wins. The company won £158m of annualised contracts in H1 compared to £89m across the whole of last year. In particular, ESL won larger sized contracts, including winning back the Britvic contract. It was also encouraging to see the strong performance of the e-commerce division reflecting both changes in the UK retail market and ESL’s initiatives to build-up its capabilities in this area. Total revenue growth was 25%, boosted by the iForce and Speedy Freight acquisitions, both of which performed well.

EBIT margin held back by contract wins

While revenue rose by 25%, EBIT increased by only 7%, with the EBIT margin declining from 5.9% to 5.0% largely due to the network reoptimisation costs associated with the new contracts, especially as they were large contracts. These costs are temporary, though, hence management’s confidence in reiterating guidance. We think the good outlook is underscored by the 10% dividend increase.

Valuation: DCF offers 51% upside

We use a DCF model to value ESL. Our DCF valuation of 190p/share provides 51% potential upside to the current share price of 126p. We use a WACC of 6.9% and a terminal growth rate of 1%. The next scheduled event will be the full year pre-close statement in November, which could be a positive catalyst if the current growth rate continues and the margin recovers.

H118 results show strong organic revenue growth

Exhibit 1: Results summary

(£m)

H117

H118

% change

Revenue

286.8

359.3

25.3%

EBITDA

19.9

22.4

12.6%

EBITDA margin (%)

6.9%

6.2%

EBIT

16.9

18.1

7.1%

EBIT margin (%)

5.9%

5.0%

Adjusted PAT

10.5

14.1

34.3%

Adjusted EPS (p)

3.6

3.9

8.3%

DPS (p)

1.40

1.54

10.0%

Adjusted free cash

16.9

0.3

(98.2%)

Net debt

97.7

114.2

16.9%

Source: ESL

Revenue

Revenue showed strong growth of 25%, of which 10% was organic. Management pointed out at the results meeting that organic revenue growth of 10% was substantially ahead of the UK logistics market. The rest of the growth in revenue was largely due to the iForce (+20% like-for-like growth) and Speedy Freight (+52%) acquisitions, which will act as a tailwind for group organic growth into H2 as the acquisitions annualise. The £53m acquisition, after the period-end, of The Pallet Network will be earnings accretive this year, according to management.

We thought the main highlight from the results was the level of new contract wins. ESL won £158m (annualised) value of contracts in H1 compared to £89m in the whole of FY17. At the results presentation, management highlighted how growth had been weighted towards large contracts including Britvic (c £30m), Homebase (c £20m), CEMEX UK (c £10m) and Knauf (c £9m). Management pointed out that normally large contracts are in the range of £5-10m. A new contract with PepsiCo (c £30m) was won after period-end. We think the contracts won so far this year should provide a useful backdrop for continued revenue growth.

Management added that the Homebase contract, which was won before the recent change of ownership, is being closely managed, with cash controls. However, we note the positive news that on 31 August, the day after ESL’s results, Homebase reached agreement with its creditors to pass its Company Voluntary Agreement (CVA) plan.

Also interesting, in our view, was the strong growth of the e-commerce division, with revenue more than doubling in the period (Exhibit 2). The division won c £18m (annualised) of new contracts including MedicAnimal, Made.com, Steamer Trading and The Works. Growth in the e-commerce market has been supported by traditional retailers looking to further develop their e-commerce offering and also new e-commerce entrants. ESL has continued to augment its e-commerce capability through the iForce acquisition, proprietary software and a multi-user offering (ie Corby Euro Hub).

Consumer was the only sector that declined, due to the loss of the Britvic contract which has now been re-secured.

Exhibit 2: Sector revenue

Sector

H117
(£m)

H118
(£m)

Growth
(%)

Proportion of H118 revenue (%)

Retail

80.0

102.0

27.5%

28%

Manufacturing, Industrial and Bulk

80.9

91.6

13.2%

25%

e-Commerce

36.9

80.3

117.6%

22%

Consumer

74.7

70.1

(6.2%)

20%

Non-sector specific

14.3

15.3

7.0%

4%

Total

286.8

359.3

25.3%

100%

Source: ESL

EBIT

A strong revenue performance was in part offset by a reduction in the margin from 5.9% to 5.0%. This was mainly caused by network reoptimisation of the business to handle the high level of new contract wins, eg the need for extra agency staff and adding warehouse capacity, which takes time to fill.

These extra costs are temporary and this was reflected in management’s outlook statement, which stated: “As with previous years, we now move into the traditionally stronger second half with costs of new contract wins absorbed in the first half. The second half has started well and the Board remain confident of delivering full year in line with expectations.”

Cash flow

Free cash declined from £16.9m to £0.3m, which was also mainly due to the ‘cost’ of higher revenue (Exhibit 3).

Exhibit 3: Cash flow (£m)

H117

H118

Underlying EBITDA

19.9

22.4

Net capex

(4.1)

(7.2)

Working capital

6.1

(11.1)

Tax

0.6

(2.2)

Other items

(5.6)

(1.6)

Total

16.9

0.3

Source: ESL

Capex increased from £4.1m to £7.2m due to the cost of fitting-out of new warehouse assets (expected to be at full capacity by year end) and technology spend on scheduling systems. Management said that capex was front-end loaded for H1 so will be lower in H2. Working capital swung from an inflow of £6.1m to an outflow of £11.1m (Exhibit 4). The net investment was due mainly to significant contract wins and increased levels of revenue.

Exhibit 4: Working capital movement (£m)

H117

H118

34% increase in sales Q218 vs Q217

-

(6.8)

Britvic contract run off in 2017 and build up in 2018

5.4

(0.7)

Management shares

3.4

-

Other items

(2.7)

(3.6)

Total

6.1

(11.1)

Source: ESL

Net debt

Net debt rose from £97.7m in H117 to £114.2m, but at 2.0x EBITDA is still at management’s target level. The increase was due mainly to three factors:

■

Acquisition of 50% stakes in both The Logistics People and Speedy Freight.

■

A decision to use finance leasing rather than operating leasing for some specialist equipment due to the lower cost

■

The increase in working capital

Valuation and estimates

Our DCF value offers 51% upside to the current share price

We use a DCF model to value ESL. We think a DCF is especially suitable for cash-generative companies like ESL. Our DCF value for ESL is 190p/share, which provides 51% potential upside to the current share price of 126p (Exhibit 5). We use a WACC of 6.9% and a terminal growth rate of 1%. Previously, we used a combined DCF/EVA methodology with a 203p/share valuation (see September 2017 update for more details).

Exhibit 5: DCF valuation for ESL

(£m unless stated)

Total discounted cash flows (FY19 to FY29)

431

Discounted terminal value

377

Total EV

807

Net debt (FY18)

(86)

Equity value

721

Number of shares (m)

379

Value per share (p)

190

(£m unless stated)

Total discounted cash flows (FY19 to FY29)

Discounted terminal value

Total EV

Net debt (FY18)

Equity value

Number of shares (m)

Value per share (p)

431

377

807

(86)

721

379

190

Source: Edison Investment Research

We have made minor adjustments to our forecasts, with FY18e PBT reducing from £51.7m to £51.3m, while EBITDA increases from £65.3m to £67.9m. Our FY19e EBITDA and PBT estimates are up slightly from £75m and £60m to £77m and £62m respectively.


Exhibit 6: Financial summary

£m

2016

2017

2018e

2019e

2020e

November year end

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

570

624

780

910

973

EBITDA

 

 

47.4

55.3

67.9

77.2

84.6

Operating Profit (before amort. and except.)

41.3

48.5

59.4

67.3

74.0

Intangible Amortisation

(9.5)

(11.1)

(11.1)

(11.1)

(11.1)

Exceptionals

(3.3)

(17.2)

(0.4)

0.0

0.0

Other

(1.2)

(0.6)

(0.6)

(0.6)

(0.6)

Operating Profit

27.2

19.6

47.2

55.5

62.2

Net Interest

(16.0)

(9.6)

(7.0)

(5.1)

(3.7)

Profit Before Tax (norm)

 

 

24.0

37.8

51.3

61.5

69.6

Profit Before Tax (FRS 3)

 

 

11.2

9.9

38.4

50.4

58.5

Tax

(1.3)

(5.0)

(7.7)

(10.5)

(13.2)

Profit After Tax (norm)

22.7

32.8

43.6

51.0

56.4

Profit After Tax (FRS 3)

9.9

4.9

30.7

39.9

45.3

Average Number of Shares Outstanding (m)

276.7

326.8

357.9

379.3

379.3

EPS - normalised (p)

 

 

7.9

9.8

12.2

13.5

14.9

EPS - normalised and fully diluted (p)

 

7.9

9.8

12.1

13.4

14.8

EPS - (IFRS) (p)

 

 

3.3

1.2

8.6

10.5

11.9

Dividend per share (p)

0.0

5.8

6.1

6.7

7.4

EBITDA Margin (%)

8.3

8.9

8.7

8.5

8.7

Operating Margin (before GW and except.) (%)

7.2

7.8

7.6

7.4

7.6

BALANCE SHEET

Fixed Assets

 

 

259

339

330

322

314

Intangible Assets

219

272

260

249

238

Tangible Assets

38

60

63

66

69

Investments

2

7

7

7

7

Current Assets

 

 

150

163

201

233

248

Stocks

2

2

3

3

4

Debtors

134

149

186

217

232

Cash

14

12

12

12

12

Other

0

0

0

0

0

Current Liabilities

 

 

(119)

(142)

(174)

(201)

(214)

Creditors

(112)

(134)

(167)

(193)

(206)

Short term borrowings

(6)

(8)

(8)

(8)

(8)

Long Term Liabilities

 

 

(201)

(147)

(129)

(122)

(113)

Long term borrowings

(173)

(114)

(91)

(80)

(69)

Other long term liabilities

(28)

(34)

(39)

(42)

(44)

Net Assets

 

 

89

212

228

231

235

CASH FLOW

Operating Cash Flow

 

 

30

30

50

59

65

Net Interest

(10)

(8)

(6)

(4)

(3)

Tax

(2)

(3)

(8)

(10)

(13)

Capex

(1)

(6)

(6)

(7)

(8)

Acquisitions/disposals

(2)

(48)

(16)

(4)

(4)

Financing

(5)

38

28

0

0

Dividends

0

(5)

(19)

(22)

(26)

Net Cash Flow

10.0

(2.4)

23.0

10.7

11.0

Opening net debt/(cash)

 

 

170

166

109

86

76

HP finance leases initiated

0

0

0

0

0

Other

(6)

58

0

0

0

Closing net debt/(cash)

 

 

166

109

86

76

65

Source: Eddie Stobart Logistics (historics), Edison Investment Research (forecasts)

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Eddie Stobart Logistics and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

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Frankfurt +49 (0)69 78 8076 960

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Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

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Sydney +61 (0)2 8249 8342

Level 4, Office 1205

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NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Eddie Stobart Logistics and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Foreign & Colonial Investment Trust — Still going strong after 150 years

Foreign & Colonial Investment Trust (FRCL) is the world’s oldest investment trust and has a distinguished dividend history. The fund is on course for its 48th consecutive year of dividend increases and an annual distribution has been paid in each of the 150 years since FRCL was launched in 1868. Paul Niven has managed the trust since 2014 and has continued to build on FRCL’s long-term record of outperformance versus its benchmark. Helped by another period of good relative performance in H118, the trust’s share price total return has now outperformed the FTSE All-World index total return over the last one, three, five and 10 years. Although equities have performed well in recent years, the manager believes there is potential for further upside, supported by corporate earnings growth.

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