What is a primary utility of historical metrics in valuation?

The primary utility of historical metrics in valuation lies in their ability to provide a factual and empirical foundation for making assessments about a company's performance. Historical data reflects actual past performance, which can help analysts avoid the uncertainties and potential inaccuracies that come with relying solely on future predictions. By examining historical metrics, analysts can identify trends, measure consistency in financial health, and understand how a company's operations have evolved over time. This grounded understanding is invaluable when creating projections and valuation models, as it offers a more realistic framework for what investors might expect based on established performance patterns rather than speculative assumptions.