Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev | Next
Author: KenN513 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 2003  
Subject: PEG on ERES Date: 7/11/2007 1:10 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I use the stock screener on Yahoo to find (what i hope are) under-valued stocks. One of my criteria is a low PEG. So I uncovered a stock called eResearchTechnology Inc. (ERES) with a PEG of .70. I got curious how the PEG is caculated, so i went back to Fool School to learn how this ratio is calcualted. Here's how i did it:

I looked up the P/E on Yahoo. ttm P/E is 60.24. Forward P/E is 27.35. The way I understand it, I should be using the trailing P/E. Correct?

On the same page I got the Diluted EPS (ttm) of .17. Then I went to analyst estimate and got estimated earnings (12/08) of .37. This is seven quarters away. So i raised .37/.17 to the 4/7 power to get 1.56. So the growth rate is 56% per annum. Following me?

Now Fool School tells me to divide the P/E by the growth: 60.24/56 is 1.08. ??? !!! ???
There is a HUGE difference between .7 reported by Yahoo and 1.08 that I just calculated! The difference is tobuy or not to buy! Especially on a small cap like ERES.

Can anyone tell me if i made a mistake in my calculation (I've gotten the same result 3 times in a row), or if Yahoo's number is has some other meaning? Yahoo's number does say "PEG Ratio (5 yr expected):", so perhaps it is less meaningful?



Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev | Next

Announcements

Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Managing Your Wealth
Our own TMFHockeypop from Rule Your Retirement fame on the TV show Managing Your Wealth.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Macro Economics

Smuggling Rice and Garlic
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement