needhelp1700

Well, that's not a lot of detail.

Let's assume you're doing a DCF. If you think the firm is undervalued, then the market thinks your discount rate is too low?

If you're using "ratios" and a multiple, the market thinks your multiple is too high?

Either way, your (subjective) risk assessments differ -- so that's one way to resolve the disconnect.

> do we really expect these firms to be cannibalized by younger firms that haven't emerged yet

..and that's the other way: modify the cash flows directly. I guess you're implying that you and the market view earnings risk similarly, but you are projecting higher base-case flows?

> By solely looking at their financial statements/ratios.

I'm confused -- are you looking at the same financials as the market? Or do you have a different set of projections, which (all other assumptions being the same) produces a screaming buy recommendation?