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PEG ratio - what does it tell us? - MoneyWeek Investment Tutorials
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- Опубликовано: 11 май 2011
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After 11 years of posting this video, the knowledge is still so valuable
"The ratio needs to fit the sector" (11:50).... that was worth watching this video. Nice job!
fabsilva1119 right, I was wondering why utility companies were so low pe
one of the best teachers, clear and straight to the point explanation. Looking forward to more videos from you.
Sir, you really deserve more recognition. Thank you for all the information you are providing.
0:38 PEG = "Price-to-earnings" divided by "growth ratio"
0:47 P/E is one way of telling whether a share is cheap or expensive
0:57 P/E is current share price divided by one-year's worth of earnings
You explained the growth rate. So many other vids that explain PEG fail to explain the how you get the growth rate. By breaking this down you can then further explore the possible problems associated with tje PEG value.
Great video, makes you wonder why the others bother.
Very informative...I love this guy's video!!!
I am a big PEG fan, and hence I have a very important question. I have always used the 5 year PEG, as I agree with you it gives far more scope than the one year. I have applied that a value of 1 is good, above the stock needs further analysis. Above 2 not to buy. But someone and I think they are incorrect about this mentioned that if the PEG over 5 years is above 1 that is good, but if it above one for one year that is not good. There is not difference if the PEG is more than 1 for the 5 or 1 year PEG it is possibly overvalued. I have read and heard always a PEG of less than 1 for the 5 year is good not more than that. Thank-you.
Excellent coverage of this topic, Sir.
Thank you so much for this useful data! Greatly appreciated.
Great, sat through countless university classes without understanding this stuff. 10 mins watching this and I have a real understanding.
Thanks. Like your other vids too.
this video has 8thousand views and gangnam style has over 800million views. and people wonder why they cant get jobs!
gangnam style doesn't feel that long ago..
@@arnaudmeert1527 It was 2012, feels like yesterday
I'd rather be full Gangnam Style than have a job.
@@vegas1854 You learn to invest because you DON'T want a real job. For most jobs, you don't need to know what PEG is.
lol
That's really a good video. But you did growth rate of earnings by comparing forecast earnings, why can't we do see the growth of last 2-5 years and place over PEG?
You can. But it's still inaccurate, because you can't know what the future holds. If a company sells wine, and next year is very rainy, they don't have any vineyards to work on.. so earnings will decline. That's the problem in investing. You need to know a hell of a lot to make predictions or projections
you teaching me more than my professor at this point tbh
FOR NEW investor (noob) would you advice to focus on divident pay stocks?
Very clear explanation, thanks so much. Do you have some videos where to look on for dividend stocks in particular ?
Good stuff, I've sat through many financial analysis classes and still can't remember what my tutor said, didn't help that he put me to sleep as soon as he opened his trap, thanks man. Whats with all the other products being blogged on here? losers, make your own videos, I'll check out your other vids too, cheers mate
Very clearly explained. Thank you!
Thank you. Very helpful.
Best teacher ever
i dont understand if p/e=10 and growth rate is 20% then why you divide 10/20 and not 10/0,2 ?
+MyDreamside Because you aren't diving by the actual percentage. If you were to do that you'd have a huge number. Since a percentage is a fraction. Ex: 10/0.2 is the same as saying
10/ 1/5. Which in turn is the same as saying 10*5. When you divide by a fraction you multiply by its reciprocal. Hopefully that helped a bit "/
Hi, could somebody help me to clarify one mathematical aspect at minute 7:00? Why is EPS Growth defined as 20%, but when actually written in the formula only 20 is keept, and the % is left out? tnks
Very well done!!!
Excellent video. Thanks Tim!!
Thank you
Sir I've a query..... Instead of taking Future EPS growth rate in the PEG Ratio, can we take Historical EPS growth rate in the PEG Ratio? Will this ratio better work with Historical EPS growth rate as compared to Future EPS growth rate?
Please give a reply to my query.
Thank you Sir.🙏
I think using historical earnings is much better in my opinion. It's usually more conservative than analyst estimates
@@hansel1611
You can use both. The problem with historical is that it may not represent the future.
sir, informative,presented very well
Thanks!
The obvious follow up question: Is there a ratio that takes the pe or peg ratios and adjusts for expected dividends so as to bring dividend stocks under better comparison?
PEGY ratio. PE / (earnings growth % + dividend yield %)
thank you, that helped me SO much!
what if i forecast -10% when PE is 10? What is PEG then?
Hi, thank you so much for an insightful video! Just a question about your comment at 11:16 about cash flow -- I'm going to take your word for it that the PEG ratio tells us nothing about whether the company can turn its earnings into hard cash. But what are those factors that would keep the company from turning the earnings into actual monies? Thanks!
+John Smith ROE or Return on Equity will tell you more about whether the company can turn the earnings into profits. The higher the ROE, the more profit the firm generates from publicly traded equity
Hi. Q: If you buy a share with PEG=3 right now; and you expect the PEG goes further;8,9,10... That can be a posibility right? In fact Im talking about AMZ.
Nice job!
Based on an original concept by jim Slater. Good video on PEG but not the whole story you need to decide. You need to consider the gearing of the company and also look at the directors share dealings, with these two additional pieces of info you have a much better picture.
+Derek Ferguson By gearing do you mean the direction they're heading? Such as a new company they're acquiring?
What does a negative PEG ratio imply? Does it mean it's very low and, thus, attractive?
For example, I'm looking at a company with a trailing P/E ratio of 21, and a forward P/E ratio of 19. Yet, the PEG is -25.27. Doesn't the lower forward P/E ratio imply anticipated earnings growth? Why is the PEG ratio negative?
No that means company's growth of earnings decreased. That's not good.
So basically you just have to figure out the future growth of the business...
if we take average of Earning per share then why are not taking average of P/E during the same period ?
Wait a minute, how do you expect me to wrap my mind about what dividing a ratio by a percentage mean? I mean just mathemAtically, what does it mean? Also what theory underpins this PEG? In practice, I am interested in knowing how far apart P/e is from P/B; I achieve that by working out a ratio of P/e to P/book. In this way, I can then say how overpriced that share price in relation to the company’s indicator of networth without splitting hairs. Please respond. Thanks in anticipation.
What about the negative PEG?
It usually means that the company is unprofitable
What about negative PEG ?
Same question.
@@sayli5892 or the growth rate is negative , sell in my opinion , correct me if i am wrong please . :)
@@wodroi The PEG punishes low growth, high dividend yield stocks. So a company with a very low growth potential, but a dividend yield of 5% might seem overvalued. A simple fix is adding the sum of the dividend yield to the growth rate:
PEGY ratio = P/E ratio without NRI ÷ (5 year EBITDA growth rate + TTM dividend yield)
For those who are not sure about "earnings", stay away from stocks. 😅😅😅
Great video thanks
9:50 if investing is that simple...
Hey....THANKS FOR THIS!
Excellent.
Sir Tim you explained it so well T_T
Tim Bennett ❤️
Who came to the conclusion that 10% for a PE of 10 is good? 1. You yourself said all industries have different PE ratios so how can this ratio be standardised. 2. Again, what is the logic? @ If something had a PE of 100 and growth of 50% I'd consider that pretty good. I understand the math but not the reasoning. Did someone just say 10% is a good for a PE of 10? Please help.
Excellent ..... if it doesn't work out for you in Investment Tim, I think you could make a great comedian...Great video!
Thanks a lot Sir🙏
Sir, @10:52 i guess growth rate can be expressed in terms of dividend...g=(1-payout ratio)*ROE
Growth rate is referring to the average EBITDA growth rate. If we sum the growth rate with the dividend yield, PEG turns into the PEGY ratio which is much better imo. PEGY doesn't punish low growth, high dividend yield stocks like the PEG does
Where do you find this information in order to make the calculations?
annual reports
Just go on google/yahoo finance, or any good brokers website
How do these people estimate the earnings growth? Seems like something they pull out their ass
Discounted cash flows
You average out the EBITDA growth rate
sustainable growth rate too maybe?
(10 / 20%) does not equal 0.5......indeed, it equals 50.0
For PEG, the growth rate is treated as a whole number instead of as a percentage
chlorophyll... more like borophyll!.... zzzzz
Must be tricky jazz up this content!!!!! Yellow Lambo girls hooters this ain't
Hihi, have you wondered this thing called the Intellitus Cash System? (check google). My coworker says it gets people tons of money.
the more videos I watch the more I realize that nothing is actually useful lol
There are many useful financial ratios out there that you can use for your investing and trading. You got to figure which works best for you. If you are a long-term investor, you might place more emphasis on certain ratios and numbers over others etc
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