If you want to call it a discount, that's fair, but it's not really. People aren't willing to pay 15 or 20x earnings, they want to pay 9 - 12x earnings. You m

If you want to call it a discount, that's fair, but it's not really. People aren't willing to pay 15 or 20x earnings, they want to pay 9 - 12x earnings. You might call this "value" investing, or a "value" trap. This generally suggests that the income stream is less reliable to maintain, and allows for heavier discounting of future earnings. On the other hand, for a "growth" company, a high P/E might be justifiable, because in a few years they will have higher earnings.