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economic profit

Just how does he do it?

Amazon founder Jeff Bezos has reported on-again, off-again profits since the online retail giant went public in 1997. Yet his company’s stock price has consistently soared.

How?

The answer is simple:

What is EVA™?

Economic Value Added, also known as economic profit, is touted as a truer method of measuring a company’s value. Consulting firm Stern Stewart & Co. – where I worked before founding ValueAligned Partners – developed and trademarked the EVA™ methodology to mitigate the various flaws in the required accounting corporate performance measures.

We are among the very few investment companies in Monmouth County, New Jersey and across the country who not only use EVA to measure corporate performance and value stocks, but also own companies, like Amazon.com, that focus on creating value rather than creating short-term accounting earnings.

Defining the Best Bottom Line

To some financial pundits, it defies logic that Amazon’s accounting bottom line hasn’t consistently been in the black. In fact, during its past 18 years as a public company, Amazon reported an annual net profit in only ten of those years.

How does that work?  

Amazon knows what it cares about, which is investing in the future and staying ahead of the curve.

It just so happens that investors in Red Bank, Middletown, and elsewhere care about the same thing.

Maybe the name of his company was a kind of prophecy. Bezos sees the bigger picture, and that’s how he stays competitive. Most CEOs simply aren’t willing to invest for payoffs so far in the future.

The Role of EVA™ at ValueAligned® Partners

I don’t own a public company, but I use the principles that define EVA™ to help investors in Monmouth County, New Jersey and numerous states across the U.S. choose stocks that will provide real economic profit over a period of time.