- One simple calculation:
For example companies A and B, growing at 15% & 40% CAGR its earnings and having valuation @15PE & 40PE, respectively.
Say both are at 100 today in valuation.
At the end of say, 5 years, Company A is still at 15PE and say company B is at half of its 5 years back valuation, 20 PE.
Now calculate and see the value of both companies end of 5years. Then you will be surprised and understand 5 years back which is cheap, in hindsight. Probably u will get the answer to your question.
Off course MOAT/SECTOR/PROMOTERS/OPPERTUNITY SIZE and lot of things matter in valuations.