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The 'PEG ratio' (price/earnings to growth ratio) is a valuation metric for determining the relative trade-off between the price of a stock, the earnings generated per share , and the company's expected growth. In general, the P/E ratio is higher for a company with a higher growth rate. Thus, using just the P/E ratio would make high-growth ...
PVGO = share price − earnings per share ÷ cost of capital. This formula arises by thinking of the value of a company as inhering two components: (i) the present value of existing earnings, i.e. the company continuing as if under a "no-growth policy"; and (ii) the present value of the company's growth opportunities.
Image source: Getty Images. ... (P/E) ratio of under 28 based on next year's analyst estimates and a price/earnings-to-growth (PEG) ratio of 0.75. Generally, a stock with a PEG under 1 is ...
A valuation multiple [1] is simply an expression of market value of an asset relative to a key statistic that is assumed to relate to that value. To be useful, that statistic – whether earnings, cash flow or some other measure – must bear a logical relationship to the market value observed; to be seen, in fact, as the driver of that market value.
While P/E alone gives an idea of stocks that are trading at a discount, PEG helps to identify stocks with solid potential. The stocks that qualify the screening include SC, PTR, AN, ASO, DVA, WLK ...
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The company's PEG ratio is low. A Price/Earnings/Growth rate below 1 means the PE ratio is less than the growth rate. An excellent stock at a fair price is more likely to be undervalued than is a poor stock at a low price, according to Charles Munger, the Harvard-educated partner of Buffett. An excellent stock continues to rise in value over ...
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