Download Growth In Earnings Ratio Background. Sustainable growth rate#from a financial perspective. Peg ratio = price to earnings ratio / growth rate.
For stock selection, i usually recommend looking at e/p (earnings price ratio) and expected earnings growth as two separate factors rather than a single. It is calculated by dividing the company s share market price by its earnings per share. The two ratios may seem to be very similar but you can see the obvious difference with a.
Peg ratio = price to earnings ratio / growth rate.
The growth rate is calculated based on historic data. One simple way to understand p/e is that it gives the number of years the company will need to generate enough value to cover the cost the stock at the current market price (assuming no growth in earnings). In other words, it allows investors an idea about a. This indicates a positive future performance, and investors.
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