Im trying to complete a comprehensive fundamental analysis of Suncorp-Metway and I'm a little confused while I'm trying to calculate the PEG ratio.
I would really appreciate some feedback on my calculations
PEG ratio = PE / Annual EPS growth .. According to investopedia.com
I have calcuated Suncorps average PE for the period of July 06 - July 07 to be 13.28
And that leaves me with finding out the Annual EPS growth..
I know the EPS for 2006 was 1.61 while for 2007 it was 1.59 so to get the annual EPS growth for that period will mean I go
1.61 / 1.59 = 1.01
Therefore the Annual EPS growth for that period was (1.01)%
So PEG = 13.28 / 1.01 = 13.11
13.11 is my final answer for the PEG ratio
Just that where ive been reading is that anything over 2.5 is bad, and here we have a highly profitable and successful company like suncorp with a PEG of over 13 ?
Thats why I think my calucation is incorrect ?
Can some one please run their own numbers or let me know if my calculations are correct and it is simply a matter of Suncorp having a high PEG ratio ?
Thanks in advance,