However, this ideology becomes especially compelling when shares are trading near or below fair value. For instance, if one views the past operating history of Kroger during the last 14 years -- just a one-year shorter timeframe -- the graph below would look quite similar to the one above. Nevertheless, now notice that the price at the beginning of this period was trading quite close to its justified earnings mark.
Consequentially, it should be expected that performance results would roughly track business results over the long term. And this is precisely what we see. While the operating growth rate of 6.7% is effectively the same as before, notice that the performance results are substantially higher. This stems directly from the concept of paying a reasonable valuation.
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