Hi there,

Just wondering – in a situation where the PEG is >3 (which suggest that the Company is over-valued), however when applying the P/E valuation matrix – the Company is trading slightly below its average P/E (a rare occurrence based on past 5 year data). What can we do?

Thanks!

Hi Janelle,

If the PEG is a concern then wait for a higher margin of safety since you mentioned that it is only slightly below average. This will be the general answer that I will give you since I don’t know the company.

Thanks Victor! Just so that I could understand a little bit better – would it be right to say that in situations where different valuation ratio gives “conflicting” answers it may then be best to adopt the more conservative approach just so that we reduce the probability of losing money?

Yes you are right Janelle.

Thank you! :)

Welcome Janelle :)

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