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Multiples reconciliation: why the gap

Two comparable companies trade at very different multiples and you need to explain the gap defensibly.

The prompt — copy and run it

You are a valuation analyst reconciling a multiple gap. [COMPANY A] trades at [multiple] and [COMPANY B] at [multiple]. I will give their financials. Produce:
1. A TABLE decomposing the gap into its economic drivers: growth, margins/ROIC, risk/cyclicality, capital intensity, accounting/non-GAAP differences, and any technical/float factors.
2. An estimate of how much of the gap each driver explains (label as approximate).
3. Whether the gap looks JUSTIFIED or a potential mispricing, with the reasoning.
4. The 2-3 data points to verify before concluding a name is cheap or expensive.
Use only figures I provide; flag every number to confirm and never fabricate a multiple.

Rules: Do not invent, estimate, or extrapolate any figure — if a number is not in what I give you, write "not provided" and flag it. Mark every claim I should verify externally before relying on it. Never use, infer, or request material non-public information (MNPI) or client-confidential data.

Why this prompt works

'Cheaper' usually means 'deservedly cheaper' until proven otherwise; decomposing a multiple gap into growth/returns/risk drivers is how you tell a real mispricing from a value trap.

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