Judge from comparisons of multiples whether a stock is priced too high, too low or fairly

Comparing a share's multiple with a benchmark, such as the peer mean or median, the sector, or its own justified multiple, suggests whether it is relatively mispriced. A P/E below the benchmark, with comparable fundamentals, points to undervaluation; a P/E above it, to overvaluation. The judgement must allow for differences in growth, risk and accounting that can justify a different multiple: a low P/E may be warranted by lower expected growth or higher risk. A PEG ratio, or a P/B read alongside ROE, can help control for this. The conclusion is only relative: a share cheap against an expensive peer group may still be overvalued. The trap is calling a share cheap on a low multiple without asking why it is low.