Wall Street hates the current narrative, but Peter Lynch built his career buying 'scary' stories with pristine balance sheets. Does this 10x P/E casino giant pass the Magellan test?
Love the Lynch Test framework applied here. The tension between the 10x P/E and the 4% growth is exactly the kind of mispric that value guys live for. Ran similar math on a few other software-like margin businesses last year and the PEG always breaks when growth temporarily dips, even if the moat is still intact. The Asian cyber issue feels fixable (probably regulatory more than technical), but the real question is wheher the market will wait for proof or front-run the recovery. Personally lean towards your Editor's Note position because that margin structure is too good to ignore.
Spot on. The PEG ratio is blind to context; it cannot distinguish between a car in the shop for repairs and one that is totaled.
I’m right there with you on the 'fixable' nature of the Asia issue. The margins prove the machine is still working; it’s just hitting a regulatory speed bump. It is uncomfortable to buy when the growth chart looks ugly, but that is usually where the mispricing lives.
I’m curious to see where you all land on this one.
The math (PEG Ratio) clearly says 'Wait,' but the valuation (10x P/E) feels like a mispricing for a business with 66% margins.
Are you siding with Lynch’s discipline (wait for the growth to prove itself), or are you buying the dip before the 'Asia Issue' gets resolved? What do you think: is this a value trap or a gift?
Love the Lynch Test framework applied here. The tension between the 10x P/E and the 4% growth is exactly the kind of mispric that value guys live for. Ran similar math on a few other software-like margin businesses last year and the PEG always breaks when growth temporarily dips, even if the moat is still intact. The Asian cyber issue feels fixable (probably regulatory more than technical), but the real question is wheher the market will wait for proof or front-run the recovery. Personally lean towards your Editor's Note position because that margin structure is too good to ignore.
Spot on. The PEG ratio is blind to context; it cannot distinguish between a car in the shop for repairs and one that is totaled.
I’m right there with you on the 'fixable' nature of the Asia issue. The margins prove the machine is still working; it’s just hitting a regulatory speed bump. It is uncomfortable to buy when the growth chart looks ugly, but that is usually where the mispricing lives.
I’m curious to see where you all land on this one.
The math (PEG Ratio) clearly says 'Wait,' but the valuation (10x P/E) feels like a mispricing for a business with 66% margins.
Are you siding with Lynch’s discipline (wait for the growth to prove itself), or are you buying the dip before the 'Asia Issue' gets resolved? What do you think: is this a value trap or a gift?