Move Over P/E, Make Way for the PEG

[aryan.]

same random companies, BHEL few others then i quit.

What PEG ratio did you get for BHEL?

I am sorry but there are more accurate and more stable ways to calculate value, I rather wish my investing friends wont fall in the P/E trap anymore.

No one is saying that you just have to look at PE ratio but its one of the factor you need to consider. You quote Warren Buffett but did you know that he also looks at PE ratio.

 

[Mr.G]

No one is saying that you just have to look at PE ratio but its one of the factor you need to consider. You quote Warren Buffett but did you know that he also looks at PE ratio.

http://www.investorsfriend.com/Price_To_Value_Ratio.htm

Get your facts straight. Even he doesn't use it for valuation.

Even if he did. PE is a fundamentally flawed approach. Thats my thinking. I dont use it and never plan on using it. Please instead of dissing me, open your mind and learn what I am trying to teach you. There is no harm in trying to understand, rather than prove your point in stone.

Learn from everyone. I am also learning from you.

 

[Vertigo_1985]

I would be very cautious with the words you use especially when you are a professional money manager, this is my guess. It is an important measure and you cant ignore it. It is also an important screen.

In the past this is how people have differentiated between growth and value play.

Ben Graham used it, Warren Buffet uses it, Peter Lynch has written about it and if you have knowledge about industry then Fama and French have also used it and published paper about their three factor model.

David Einhorn, Karl Icahn and many more people use it. It is an important metric to compare stocks in the same industry.

All these details for you just to prove a point that be cautious(and humble) when and what you write.

"professional money manager " :lol:

 

[Einstein]

What PEG ratio did you get for BHEL?

By your formula, with current p/e and current eps ttm it should be near
-1.18

(diluted eps growth rate is -ve it caagr is around -5.30)

annually just with the EPS (not growth). it is like this. which is definitely wrong.
09 - 10 - 11 - 12 -13
1.89 - 1.27 - 0.74 - 0.40 - 0.30

*EPS is adjusted with dividends.

 

[whisky]

"professional money manager " :lol:

what BHEL puri professionals are making here.:lol::rofl:

 

[Einstein]

http://www.investorsfriend.com/Price_To_Value_Ratio.htm

Get your facts straight. Even he doesn't use it for valuation.

Even if he did. PE is a fundamentally flawed approach. Thats my thinking. I dont use it and never plan on using it. Please instead of dissing me, open your mind and learn what I am trying to teach you. There is no harm in trying to understand, rather than prove your point in stone.

Learn from everyone. I am also learning from you.

Yaar, flawed is not the right choice of word here, it is rather misunderstood concept. an average joe is told that low PE means cheap company, where it is as i said 'physiology' ratio.

PEG does that same thing it takes speculation in it first is growth second is market capital from PE. it does not look at asset earnings power in consideration. so this is flawed. just like DCF valuation.
https://www.youtube.com/watch?v=t6gvu3zMsDI

P/E came into existence from ben graham himself who promoted fundamental analysis, at that time stock markets were not that much liquid as it is today. i think from there he made a conclusion that low pe means company don't have enough investors hence its cheap.

 

[Mr.G]

Yaar, flawed is not the right choice of word here, it is rather misunderstood concept. an average joe is told that low PE means cheap company, where it is as i said 'physciology' ratio.

PEG does that same thing it takes speculation in it first is growth second is market capital from PE.

Whats the use of tying price and earnings to value something? Both are volatile compared to the true intrinsic value.

Psychology ratio is the exact term that should be used for it. In term of hard cold valuation. No use for it. According to me.

 

[whisky]

Yaar, flawed is not the right choice of word here, it is rather misunderstood concept. an average joe is told that low PE means cheap company, where it is as i said 'physciology' ratio.

PEG does that same thing it takes speculation in it first is growth second is market capital from PE.

smajhta nahi hai yaar:lol::rofl:

 

[Einstein]

Whats the use of tying price and earnings to value something? Both are volatile compared to the true intrinsic value.

Psychology ratio is the exact term that should be used for it. In term of hard cold valuation. No use for it. According to me.

Einstein took mass, he took speed of light, he took energy and combined them into one unified formula E=MC2. same thing applies here. PE is encapsulated with the interest rate and bond yield to get the intrinsic value.

 

[whisky]

Einstein took mass, he took speed of light, he took energy and combined them into one unified formula E=MC2. same thing applies here. PE is encapsulated with the interest rate and bond yield to get the intrinsic value.

Kya Yaar funde de raho ho, simple language me ye batao note kase chapenge funde se ya technical dande se (means technical bars):lol::rofl: