Value is not a low multiple: A broader framework for identifying undervalued businesses

Value investing, in this framework, is less about low near-term valuation multiples and more about a clear gap between today’s price and a company’s medium- to long-term fundamentals. The focus shifts from next-twelve-month earnings to what a business can earn several years out, once margins normalize, growth initiatives mature and capital allocation compounds per-share value.

By classifying opportunities into classic value, mispriced growth, undervalued quality, discounted cash flow and discounted assets, investors can pinpoint how and why the market is wrong. This structure clarifies the specific drivers that must materialize for each thesis to work and highlights distinct risks that could undermine it.

For portfolios, diversifying across these different sources of mispricing can create multiple pathways for return while avoiding overreliance on any single style label or macro outcome.