Intermediate13 min read
Historical valuation and mean reversion
Comparing a company to its peers is one way to judge whether a price is fair. Comparing it to itself is another: how its , margins, profits, and have evolved over time, and what that evolution says about today's price.
A company's own trading history is a of one. It can tell you something no comparison against other companies can, whether today's price is rich or cheap relative to what the market has paid for this same business at different points in its own history, even as the business itself changed along the way.