A fair multiple for a great business still needs patience

After a long stretch of the shares going sideways while earnings kept growing, the multiple on this network finally looks fair. Fair is not the same as cheap, and a fair price for a great business asks for patience rather than rewarding it immediately.

How a multiple compresses without anything going wrong

When a business keeps growing earnings and the share price stays flat, the multiple falls on its own. Nothing broke. The market simply stopped paying the premium it used to, and the business grew into a lower valuation.

That is the most comfortable way for a great company to become reasonably priced, and it tends to happen when attention has moved elsewhere.

What I'm watching

• Payments volume growth, which is the engine under the earnings
• The multiple against its own history
• Regulatory proposals on interchange, the recurring overhang

Where I stand

Flat. The price is fair, and I would rather own this at a price where the returns do not depend on the multiple expanding again.

What would change my mind

A further de-rating while volumes hold up. That is the gap between fair and cheap, and it is where patience turns into opportunity.