Enjoyed this video? Then subscribe to the channel now, and watch my video on how to analyze Earnings Per Share (EPS) next: ruclips.net/video/TRY_mjggMQY/видео.html
Thank you for this gem of a video, clearly explained. While PEG ratio is not a solve all equation it should definitely be a tool in every investors tool box. Great job!
This video actually explains how to calculate the growth rate whereas other videos only explain PEG without explaining how the growth rate is calculated as a part of the math which leaves needed but missing information out.
Glad it was helpful! More videos on related topics like EPS, dividend yield, and free cash flow, in this playlist: ruclips.net/video/TXjkQy5KJog/видео.html&pp=gAQBiAQB
Hi there! I did not delete your earlier comment, but cannot find it anymore in RUclips Studio Analytics, even though it did show up in notifications. Could be an automatic deletion by RUclips if a link was included. Thanks for the compliments!
If a company has growing eps and the stock pays out about 10% per share thats a good point to invest basically. You don't really need to do a peg ratio. Anything that has over 20% growth rate is not sustainable long term. Generally when a stock has higher growth rate your basically over paying for the stock and its why people like Warren Buffet stays away cause he knows the growth rate is going to decline over time.
An additional thing to watch out for is whether the EPS is growing through an increase in the numerator (earnings) or a decrease in the denominator (number of shares outstanding). See my analysis of Apple EPS! ruclips.net/video/TRY_mjggMQY/видео.html
Hi, I know this video is about PEG ratio but I have a question about PEGY. I came to this channel for help because I notice that you answer your comments which I appreciate and will in a result be loyal to the subscription of this channel. So, I'm doing my PEGY ratio following the formula which goes like this: P/E ÷ (Growth EPS % + Dividend Yield) So, sometimes the business could have a negative P/E ratio (the firm has negative earnings) and that is shown as zero 0. So there I was inputting 0 into the formula only to get a PEGY value of 0 since it was all divided by 0. So, what do I do? Do I find the negative P/E ratio Value? I was taught that PEGY was supposed to give a detailed insight compared to the P/E ratio, but I am quickly proven that it is flawed? hahaha Please help me as you are one of the only ways I could get help online. Thank you for your time.
Hi Irfaan! Same thing applies to PE, PEG and PEGY: a disclaimer is that calculating a PEG ratio is not meaningful if the earnings per share and/or the growth rate is negative. If you come across such a business or stock, I suggest to put NMF as a value in the column: Not MeaningFul.
Hi, Thanks for the video i have one question lets say a company whose earning per share is 10 and p/e is 20 (CMP is 200) and profit growth for last 3 year is 20 so as per peg ratio it is fare value right, but if a company is growing by 20% i.e in next year its earning will be 12 rupees and it will take around 10 to 15 year just to return my investment amount so why should we invest in it?
Well, it is up to you whether or not to invest in shares, versus other possible asset classes.... people use the price earnings growth ratio to find growth at a reasonable price, so it is mostly a tool to compare the relative attractiveness of the shares in one company versus others in the same industry, rather than a metric to look at the "absolute" attractiveness.
To calculate the price-earnings-growth ratio: take the P/E ratio, and divide it by the growth rate. If the outcome of the calculation is that the PEG is 0, then the numerator must be 0, hence the share price is 0. Where did you come across this example or datapoint of a PEG of 0?
That could simply mean they don't have any data to calculate it, or maybe that the company made a loss in the most recent financial year and therefore they have zeroed out the PEG field. In a loss-making situation, neither the PE ratio or the PEG ratio make any sense.
I always wonder if one country has an industry benchmark for all the financial ratios. Like, in country A has this commitee to set the benchmark for e.g. ROE > 10% means good, current ratio above 1.5 is good and below 1.5 is bad etc, and the benchmark differs from one industry to the other like consumer goods, mining, wholesaler, banking etc. And those benchmark are kinda fixed in some way. I hope you understand what I'm saying, my English is not so good
Hello Surya! The important thing is to look "behind the numbers", even within the same industry. For ROE, what is it driven by: profit margin, asset turnover or financial leverage ruclips.net/video/bhbDDSohJ84/видео.html I prefer companies with high profit margin, high asset turnover and low financial leverage, even if that brings their total ROE < 10%. Similar thing for current ratio. Is a Current Ratio of 2, 3 or 4 necessarily a good thing? The ability of a company to pay its bills would be very high, but a very high Current Ratio could also be a sign that a company is not putting its cash to much productive use. Maybe they should invest it in the business (new equipment, or more R&D spending), do an acquisition, or pay a dividend to its shareholders. Is a Current Ratio lower than 1 necessarily a bad thing? The ability of a company to pay its bills might be lower, but a Current Ratio below 1 could also be a sign that a company is very good at managing its working capital: keeping its receivables and inventory low, and its payables high. ruclips.net/video/dkiSWO2OYho/видео.html
@@TheFinanceStoryteller Yes, I agree with your first sentence, and I kinda understand the rest since I watched them at least once back then :) So that means there are no such thing in the world ? Even back then?
@@SuryaBudimansyah Not that I know of, but let me know if you do come across any such list! "There is nothing either good or bad, but thinking makes it so" - William Shakespeare. ;-)
Peace You do not know me but I know you, I see full of your videos are very much waiting for you and even when I have occasional questions, you answer on your channel and for that I thank you. It is possible to receive your email or I will send you mine, because I am very interested in knowing how to analyze reports at a very high level and as I see you know how to read reports and explain them very simply. I have been trading stocks for 6 years based on technical analysis in the last two years I am very interested in reports and also learned a lot but I feel stuck and not everything is flowing for me. Is it possible that you have prepared reports with explanations of anything and everything and I will pay you for it? Or will a teacher-student relationship be built until I know well enough? Of course everything is for a fee! I would love to do something beyond RUclips, I want to know how to read reports and numbers really well and I am the best student you will have !!!
Thanks for all the questions and comments you have posted so far. Take a look in the "About" tab of my channel, my e-mail address will become visible once you click the "VIEW EMAIL ADDRESS" button. Look forward to connecting. By the way, I don't do technical analysis at all. Fundamental analysis: yes. Chasing convexity: YES!!!! 😉
Enjoyed this video? Then subscribe to the channel now, and watch my video on how to analyze Earnings Per Share (EPS) next: ruclips.net/video/TRY_mjggMQY/видео.html
Thank you for this gem of a video, clearly explained. While PEG ratio is not a solve all equation it should definitely be a tool in every investors tool box. Great job!
Yes, exactly! PEG is a real enhancement over PE ratios.
Love your channel. See you posted a video after 6 months, welcome back.
Thank you! Was very busy with other work activities for a long time, now back to at least one new video per week.
This video actually explains how to calculate the growth rate whereas other videos only explain PEG without explaining how the growth rate is calculated as a part of the math which leaves needed but missing information out.
Thank you! Yes, I think it is important to define assumptions and sources of data when you explain a calculation.
Thanks for your efforts, god bless you.
Thank for your last educative video i get to learn basic accounting from you
You're welcome, Taoriq! I enjoy putting these videos together.
Great video. Thankyou.
Glad it was helpful! More videos on related topics like EPS, dividend yield, and free cash flow, in this playlist: ruclips.net/video/TXjkQy5KJog/видео.html&pp=gAQBiAQB
Very well explained! Thanks
You're welcome!
great video, thank you
Thank you for the kind words!!! More investment related videos in this playlist: ruclips.net/video/DcSGDuH0yso/видео.html
TY! Wonderful!
Glad you enjoyed it!
My bad man. Didn't know it'd bother you that much. Great video regardless 👌
Hi there! I did not delete your earlier comment, but cannot find it anymore in RUclips Studio Analytics, even though it did show up in notifications. Could be an automatic deletion by RUclips if a link was included. Thanks for the compliments!
If a company has growing eps and the stock pays out about 10% per share thats a good point to invest basically. You don't really need to do a peg ratio. Anything that has over 20% growth rate is not sustainable long term. Generally when a stock has higher growth rate your basically over paying for the stock and its why people like Warren Buffet stays away cause he knows the growth rate is going to decline over time.
An additional thing to watch out for is whether the EPS is growing through an increase in the numerator (earnings) or a decrease in the denominator (number of shares outstanding). See my analysis of Apple EPS! ruclips.net/video/TRY_mjggMQY/видео.html
Do you have video on "ROA" as well ? If yes, please share link
Yes, I do! 😊 I actually have a whole playlist on DuPont analysis, of which ROA is a part: ruclips.net/video/2j8bfR8KqJ0/видео.html&pp=gAQBiAQB
@@TheFinanceStoryteller Thanks again for your kind help, god bless you.
Thank youu
You're welcome, Salma!
Hi, I know this video is about PEG ratio but I have a question about PEGY. I came to this channel for help because I notice that you answer your comments which I appreciate and will in a result be loyal to the subscription of this channel. So, I'm doing my PEGY ratio following the formula which goes like this: P/E ÷ (Growth EPS % + Dividend Yield)
So, sometimes the business could have a negative P/E ratio (the firm has negative earnings) and that is shown as zero 0. So there I was inputting 0 into the formula only to get a PEGY value of 0 since it was all divided by 0. So, what do I do? Do I find the negative P/E ratio Value?
I was taught that PEGY was supposed to give a detailed insight compared to the P/E ratio, but I am quickly proven that it is flawed? hahaha Please help me as you are one of the only ways I could get help online. Thank you for your time.
Hi Irfaan! Same thing applies to PE, PEG and PEGY: a disclaimer is that calculating a PEG ratio is not meaningful if the earnings per share and/or the growth rate is negative. If you come across such a business or stock, I suggest to put NMF as a value in the column: Not MeaningFul.
@@TheFinanceStoryteller alright sweet! Thank you, my teacher.
Could you make a video on P/B Ratio Please?
I have one video on the channel that is very close to that: "Book Value vs Market Value of Shares" ruclips.net/video/uCs9AyGIb3c/видео.html
Hi, Thanks for the video i have one question lets say a company whose earning per share is 10 and p/e is 20 (CMP is 200) and profit growth for last 3 year is 20 so as per peg ratio it is fare value right, but if a company is growing by 20% i.e in next year its earning will be 12 rupees and it will take around 10 to 15 year just to return my investment amount so why should we invest in it?
Well, it is up to you whether or not to invest in shares, versus other possible asset classes.... people use the price earnings growth ratio to find growth at a reasonable price, so it is mostly a tool to compare the relative attractiveness of the shares in one company versus others in the same industry, rather than a metric to look at the "absolute" attractiveness.
If a company grow 10% every year. And i want to invest for 3 years. Do i take PE/ 30%?
Nope. Your "investment horizon" of 3 years is not part of the calculation.
@@TheFinanceStoryteller so just year then?
@@Puzzledata Yep.
Growth or eps growth ?
Preferably EPS growth.
what does it mean if the PEG is 0 ?
To calculate the price-earnings-growth ratio: take the P/E ratio, and divide it by the growth rate. If the outcome of the calculation is that the PEG is 0, then the numerator must be 0, hence the share price is 0. Where did you come across this example or datapoint of a PEG of 0?
@@TheFinanceStoryteller
I sow it 0 in some stocks in FINVIZ while absorbing their PEG
That could simply mean they don't have any data to calculate it, or maybe that the company made a loss in the most recent financial year and therefore they have zeroed out the PEG field. In a loss-making situation, neither the PE ratio or the PEG ratio make any sense.
@@TheFinanceStoryteller thank you so much
I always wonder if one country has an industry benchmark for all the financial ratios.
Like, in country A has this commitee to set the benchmark for e.g. ROE > 10% means good, current ratio above 1.5 is good and below 1.5 is bad etc, and the benchmark differs from one industry to the other like consumer goods, mining, wholesaler, banking etc.
And those benchmark are kinda fixed in some way.
I hope you understand what I'm saying, my English is not so good
Hello Surya! The important thing is to look "behind the numbers", even within the same industry. For ROE, what is it driven by: profit margin, asset turnover or financial leverage ruclips.net/video/bhbDDSohJ84/видео.html I prefer companies with high profit margin, high asset turnover and low financial leverage, even if that brings their total ROE < 10%. Similar thing for current ratio. Is a Current Ratio of 2, 3 or 4 necessarily a good thing? The ability of a company to pay its bills would be very high, but a very high Current Ratio could also be a sign that a company is not putting its cash to much productive use. Maybe they should invest it in the business (new equipment, or more R&D spending), do an acquisition, or pay a dividend to its shareholders. Is a Current Ratio lower than 1 necessarily a bad thing? The ability of a company to pay its bills might be lower, but a Current Ratio below 1 could also be a sign that a company is very good at managing its working capital: keeping its receivables and inventory low, and its payables high. ruclips.net/video/dkiSWO2OYho/видео.html
@@TheFinanceStoryteller Yes, I agree with your first sentence, and I kinda understand the rest since I watched them at least once back then :)
So that means there are no such thing in the world ? Even back then?
@@SuryaBudimansyah Not that I know of, but let me know if you do come across any such list! "There is nothing either good or bad, but thinking makes it so" - William Shakespeare. ;-)
Peace
You do not know me but I know you, I see full of your videos are very much waiting for you and even when I have occasional questions, you answer on your channel and for that I thank you.
It is possible to receive your email or I will send you mine, because I am very interested in knowing how to analyze reports at a very high level and as I see you know how to read reports and explain them very simply.
I have been trading stocks for 6 years based on technical analysis in the last two years I am very interested in reports and also learned a lot but I feel stuck and not everything is flowing for me.
Is it possible that you have prepared reports with explanations of anything and everything and I will pay you for it?
Or will a teacher-student relationship be built until I know well enough?
Of course everything is for a fee!
I would love to do something beyond RUclips, I want to know how to read reports and numbers really well and I am the best student you will have !!!
Thanks for all the questions and comments you have posted so far. Take a look in the "About" tab of my channel, my e-mail address will become visible once you click the "VIEW EMAIL ADDRESS" button. Look forward to connecting. By the way, I don't do technical analysis at all. Fundamental analysis: yes. Chasing convexity: YES!!!! 😉
@@TheFinanceStoryteller i send you mail, thanks.
I have responded to your e-mail, but it could have ended in your spambox. Can you check?
@@TheFinanceStoryteller you are absolutely right, it was is spam.
now i check the video you send me..
thanks a lot
P E G______________ it will come back to you.