Day40. Financial term | Earnings Per Share
The PEG ratio is a comprehensive indicator that combines a company's Price-to-Earnings ratio (PE) and earnings growth rate (EPS).
Specifically, the PEG ratio is the ratio of PE to EPS growth rate.
The PEG ratio is often used to help investors understand a company's growth prospects and whether its current stock price is reasonable.
If a company has a PEG ratio less than 1, it means that its stock price is reasonably valued relative to its earnings growth potential, indicating a favorable investment opportunity.
Conversely, if the PEG ratio is greater than 1, the company's stock price may be overvalued, and there might be some future risks.
Here's an example:
Suppose you are considering buying stocks of a company with a PE ratio of 25 and an expected annual growth rate of 20%. You can use the PEG ratio to assess whether the company is undervalued or overvalued.
The formula for calculating the PEG ratio is PE ratio divided by the annual growth rate. In this case, the PEG ratio would be 1.25 (25/20).
According to the PEG ratio guidelines, a company with a PEG ratio less than 1 is considered undervalued, while a PEG ratio greater than 1 indicates overvaluation. A PEG ratio equal to 1 is considered a reasonable valuation.
In this example, the company has a PEG ratio of 1.25, slightly higher than 1, which means the company is considered overvalued. In such a case, you may consider waiting for a price drop before buying or explore stocks of other companies.
Regarding the PEG ratio, here are some additional points to note:
The PEG ratio is only a reference indicator and should not be the sole basis for investment decisions. It needs to be considered along with other factors such as a company's financial condition and industry outlook.
Calculating the PEG ratio requires reliable future growth projections. Deviations in the projections can render the PEG ratio less meaningful as a reference.
PEG ratio standards may vary across different industries. You should compare the PEG ratio with companies in the same industry to determine if it holds investment value.
Pay attention to the company's earnings quality and stability. Do not solely rely on a low PEG ratio and overlook potential risks associated with the company.
In conclusion, the PEG ratio is a valuable reference indicator that can help you identify potential investment opportunities.
However, it should not be the sole basis for investment decisions and needs to be considered along with various factors!
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What is PEG ratio?
👉 to check if a company's stock price is reasonable to buy
👉 PEG ratio > 1 = stock price overvalued
👉 PEG ratio < 1 = stock price undervalued
How to count PEG ratio? [Doubt]
👉 PE Ratio (PER) ÷ Annual Growth Rate (AGR)
👉 PER 24 ÷ AGR 25 = PEG ratio 0.96 (undervalued! investment opportunity! [smile])
*PEG ratio is a valuable reference indicator to identify potential investment opportunities & should not be the sole basis for investment decisions!
**Check it out the additional points & notes @Tiger_Academy Day40. Financial term | Earning Per Share 😉
PEG ratio is a valuable reference indicator that can help you identify potential investment opportunities.
@koolgal @rL @icycrystal @b1uesky @Universe宇宙 @Aqa @GoodLife99 come and join ya
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The PEG ratio allows investors to calculate whether a stock's price is overvalued or undervalued by analyzing both today's earnings and the expected growth rate for the company in the future.
By knowing if a company is overvalued or undervalued will help us 🐯🐯🐯 to know whether we should buy a stock, when to buy a stock, and what price to buy the stock at. Thanks loads @Tiger_Academy ❣️
🌟🌟🌟PEG ratio or Price /Earnings to Growth ratio is an important metric for me to value a stock. In fact it is the only metric that takes a company's earnings growth rate into account. PEG is a great metric as it takes into consideration a company's growth prospect which is forward looking.
So if a PEG ratio is more than 1, it is considered overvalued. Conversely if it is less than 1, it is considered undervalued.
However it is important to use other metrics as well when deciding on whether to buy a stock, not just PEG ratio only, to get a more comprehensive analysis.
Thank you @Tiger_Academy for your important lesson on PEG which I will share with my other Tiger Friends.
股票被认为是风险较高的投资，因为它们的价值有波动的趋势。投资者很有可能会损失一大笔或全部投资。在我们购买一家公司的股票之前，我们需要检查该公司的财务表现和行业前景。检查公司财务表现的最简单方法之一是查看公司的财务报表和财务比率，如市净率、市盈率和股息率，这些都是常用的指标，可以帮助分解股票的价值和前景。
我一直在用公司的市净率、市盈率、股息率、净收入、每股收益、资产负债表、现金流来帮助我在投资前评估一只股票。非常感谢你@Tiger_Academy 介绍并详细解释了PEG比率，它是一个综合了公司市盈率（P/E）和收益增长率（EPS）的综合指标。现在，我还有一个指标来帮助我识别潜在的投资机会。
市盈率（PEG比率）是一只股票的市盈率（P/E）除以其特定时期内的收益增长率。
PEG比率用于确定股票的价值，同时也考虑公司的预期收益增长，它被认为比更标准的市盈率提供了更完整的情况。因此，PEG比率是一个有价值的参考指标，可以帮助我们识别潜在的投资机会。
一般来说，一个好的PEG比率的值低于1。大于1的PEG比率通常被认为是不利的，表明股票被高估了。与此同时，低于1的PEG比率被认为更好，表明股票相对被低估。PEG比率等于1被认为是合理的估值。
Friends come learn @Shyon @Universe宇宙 @GoodLife99 @Fenger1188 @Jadenkho @SR050321 @DiAngel @koolgal @MHh @LMSunshine @b1uesky