The Predictive Power of SIRRIPA as a Forward-Looking Equity Return Metric: Empirical Evidence from U.S. Technology Stocks (2024–2026)

This article introduces and empirically evaluates SIRRIPA (Stock Internal Rate of Return Including Price Appreciation) as a structural, forward-looking return metric for equities. Unlike traditional valuation ratios or factor-based models, SIRRIPA expresses valuation in return space rather than multiple space and is derived from the Potential Payback Period (PPP), a time-based valuation framework.

Using a sample of 15 major U.S. technology companies, SIRRIPA is calculated as of February 9, 2024 and compared to realized stock performance over the subsequent two years ending February 9, 2026. We find a strong positive relationship between SIRRIPA and realized returns, with a Pearson correlation of 0.63 across the full sample. When one firm affected by exogenous regulatory and governance shocks (Super Micro Computer) is excluded, the correlation rises to 0.74, explaining more than half of the cross-sectional variation in realized returns.

The results provide empirical evidence that SIRRIPA captures a structural component of expected equity returns and possesses meaningful medium-term predictive power.