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Author: kcanant Three stars, 500 posts Old School Fool CAPS All Star Most Active, Foolanthropy 2013 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 214614  
Subject: A fun exercise Date: 10/6/2012 9:57 AM
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As an aside, the more a firm is growing the more important the ROE.
A growing firm with an uninteresting ROE is worth nothing extra
 due to its growth rate, and even a slowly growing high ROE 
firm is potentially worth a lot.
The PEG ratio is misleading, as it conflates growth with
 worthwhile growth.
Rather than growth/PE it should be something more like 
(1+ growth rate above inflation times amount by which ROE
 exceeds the long run median) times
(the amount by which the cyclically adjusted earnings yield
 exceeds Siegel's constant of 6.5%).

As a fun exercise, try this calculation for both Amazon and Walmart.
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