Prevailing sentiment vs Future growth
An optimist looks at the glass half full and smiles while a pessimist looks at the glass half empty and sulks. Everyone knows this, except probably the optimist and the pessimist. While this is an idiom that's been used since times immemorial, arguably, there is another way to look at the glass.
An alternative to pegging sentiment to how much the glass has already been filled is assessing how much future potential there is to fill the glass.
An empty glass means there is potentially a whole glass can be filled in the future, putting the entire value in the future potential of filling the whole glass. Now lets consider the glass as a metaphor for a company. The market sentiment on the company reflects how much the glass has already been filled, while the future value relies on how much more there is to fill.
Often, the tricky part in assessing the value of a company is to decide how much of the value to attribute to current market share and how much to attribute to future growth. Every investor in a company has his/her own theory on the company’s current numbers vs future growth potential. This theory is important to focus on and test for irrational exuberance or irrational conservatism or the many shades of rationalism in between these two extremes.
A tall drink of water will always be attractive.