DVM scores and PE Valuation Check are two different data points for stock analysis and may not always align.
A. The Valuation Score in the DVM score is calculated based on current metrics such as P/E ratio, P/BV ratio, and share price.
Please refer to this article for more details on the DVM score and its performance - https://trendlyne.com/score-details/.
B. PE Valuation Check uses two comparisons to assess if a stock is overvalued or undervalued:
Current PE vs 5-year Average PE
It compares the stock’s current Price-to-Earnings (PE) ratio with its average PE over the past 5 years.1-Year Forward PE vs 5-year Average PE
It compares the projected 1-year forward PE (based on the estimated earnings for the next year) with the 5-year average PE.
These checks help identify whether the stock is trading above or below its usual valuation levels.
These two data points can sometimes convey differing and opposite information about a stock.
For example, a stock might show a low Trendlyne Valuation Score (indicating possible overvaluation), but still appear as ‘Undervalued’ in the Valuation Check section if its current PE ratio is lower than its 5-year historical and 1-year forward PE.