Among the stock valuation indicators, PEG is a good valuation indicator. Many famous investment masters use this valuation indicator, but what does PEG mean? What is its calculation formula? Let's learn together.
PEG is Peter Lynch's commonly used valuation index. Peter Lynch is the most famous American fund manager in the 20th century, with a compound annual return rate of 29% during his career. He is as famous as Buffett, Graham and John Berger. PEG measures the value of stocks from the perspective of P/E ratio and earnings, and measures the relationship between the P/E ratio and the growth of corporate earnings.
PEG calculation formula:
PEG=市盈率/公司的预期盈利增速
PEG=PE/G
Among them, the expected earnings growth rate of the company refers to the future earnings, which is exactly the compound annual growth rate of the company's earnings for a period of time in the future. But how to calculate the compound profit growth rate this year? Let's look at an example.
Suppose that a company's profits in the next five years range from 100 million to 200 million.
那么盈利的年复合增长速率=G
1亿×(1+G)^5=2亿
从而求得G=14.87%，也就是说公司的盈利年复合增长率为14.87%。意思是如果公司初始市值为1亿，公司的盈利的年复合增长率为14.87%，那么5年之后这个公司市值2亿。但是这个G是未来发生的事情，无法精准预测，G带有主观的人为预测。也正是这个原因，PEG在实际应用中比较困难，我们在使用的时候要保留足够的安全边际。
For the same variety, the lower the PEG, the higher the investment value. That is to say, the lower the numerator P/E ratio, the higher the expected profit growth rate of the denominator company, and the higher the investment value. For most varieties, the range of long-term PEG should be:
1<PEG<2
彼得·林奇认为：PEG<1，则是低估的，具有很高的投资价值。
