If a company reports a bad quarter (where earnings and or revenues are slowing or decreasing), the stock's P/E Ratio will typically decline as a result of investors's concerns about the company's future.

However, in Section 3 of the stock study, the comparison of the current P/E to the historical P/E Ratios will make the shares appear to be undervalued. If you ignore the recent performance, the stock may appear to be selling at a good price -- which, if the company's recent bad performance continues, will probably not be the case.

For these reasons, recent performance needs to be taken into consideration more deeply whenever you come across a company with projected total return that seems particularly attractive. The SSG doesn't do a good job of preventing investors from falling into this trap, which is the point of the warning in the manual and in the program in the warning dialog box you get when you launch the Challenger.

Doug