CompanyGraph
A valuation ratio is price divided by an accounting or cash-flow denominator. If the denominator is temporary or incomplete, cheapness is an illusion.
Why can a low P/E be misleading?
Cyclical peak profit, asset-sale gains, tax benefits, fair-value changes, underprovisioning, or a weak share-price outlook can lower P/E. Normalize earnings across a cycle and remove non-recurring sources.
Price Below Graham Number, Elevated EBIT Margin With Decelerating Sales Growth, And Beneish M-Score Elevated
Three independent academic frameworks fire together: Graham Number (price below the model's intrinsic-value ceiling), the margin-elevation/growth-deceleration composite, and the Beneish M-Score (eight-variable earnings-quality composite)
This screen shows a cheap-looking configuration with its warning attached: price below the Graham number while growth decelerates behind an elevated margin and the Beneish M-Score sits elevated. It does not normalize earnings for you.
Why can price-to-book be misleading?
Book value may depend on goodwill, intangibles, deferred tax assets, stale property values, or receivables and inventory that will not convert at carrying value. IAS 36 provides impairment context, not automatic liquidation value.
Low P/B with Intangible and Goodwill Concentration
Price-to-book is low while intangibles and goodwill are a large share of the asset base
This screen shows a low price-to-book reading standing on an intangible- and goodwill-heavy asset base. It does not estimate recoverable value.
Why can free-cash-flow yield be misleading?
Working-capital release, deferred capex, supplier stretching, asset-light classification, and stock compensation can flatter current cash. Estimate maintenance and normalization before capitalizing one year.
Which liabilities and ownership claims matter?
Include debt, leases, pensions, guarantees, preferred stock, convertibles, dilution, legal claims, and required investment. Enterprise and equity values must match the cash flow assigned to them.
What distinguishes opportunity from value trap?
Identify why the discount exists, what evidence could close it, who has authority and resources to act, and what happens if the catalyst fails. Structural decline can make every historical multiple obsolete.
Why does each cheapness test need its own model?
A generic value panel would force one model onto several failure modes; the two panels above are denominator-specific, one for earnings multiples and one for book value. Use CompanyGraph's specific value and conflict guides after choosing the denominator, then verify filings. The SEC's Form 10-K guide identifies the records needed for that work.