Not that this matters to us as bottom up stock pickers but for those interested below are the market assumptions from Fidelity.

Profit margins are clearly seen to be reducing from the current elevate levels. Interesting that they have multiple expansion (valuation) everywhere but the US - highlighting how the US is seen as more expensive than other markets.

Finally on the subject can see the recent market weakness is all multiple compression. Where yet to see a hit to earnings from any economic slowdown in the recent earnings season.

Nice reminder too of what drives stock returns.

Many of us use multiples in valuation so thought it would be worth looking at how to work out a relevant multiple. The most common being a PE ratio.

The Credit Suisse here is quite detailed and worth a read PE Multiples - Credit Suisse.pdf . I'd note for a no growth business they see a 12.5x multiple as reasonable. If you are paying less than that earnings are expected to shrink and more than that its expected to grow.

The next resource I think is work reading is those from the Footnoes Analyst (ex UBS analysts and IFRS board members) - Analytical models | The Footnotes Analyst - in particular this model, where they look at that would be an appropriate PE multiple with an explanation of the inputs as well avaialble on their website Price earnings ratios – DCF in disguise | The Footnotes Analyst - they also have it as a downloadable excel spreadsheet.

This one is also useful on enteprise values - Interactive model: Target enterprise value multiples | The Footnotes Analyst