PEG Ratio

Just putting together a plan for investing and was wondering who here uses the PEG Ratio in analysing a company?

Also i know that it is PE/Growth but where do you calculate the Growth from? Is it the EPS Grown %?

Thanks!

skip9 said:

Just putting together a plan for investing and was wondering who here uses the PEG Ratio in analysing a company?

Also i know that it is PE/Growth but where do you calculate the Growth from? Is it the EPS Grown %?

Thanks!

Click to expand...

Yes EPS growth. PEG is a useful number but you must always be careful not to extrapolate too much. E.g. Those who bought JB Hifi at the high for some reason thought it could expand forever, when in fact you'd struggle to find a shopping centre without a shop already.