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Janelle Lee asked 5 months ago

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!

1 Answers
Victor Chng answered 5 months ago

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. 

Janelle Lee replied 5 months ago

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?

Victor Chng replied 5 months ago

Yes you are right Janelle.

Janelle Lee replied 5 months ago

Thank you! :)

Victor Chng replied 5 months ago

Welcome Janelle :)