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Author: EnsignSuder Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 2003  
Subject: PEG Ratio Date: 4/9/2007 12:03 AM
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I, too, would like some confidence in using using PEG. In order to see if I understood everything I read, I used a stock I own: GE. At the time I did the calculations, I couldn't find anywhere that gave a five year estimate of growth. The best I could find is one year out.

I also couldn't find "Earnings TTM" The best I could do is "Diluted EPS(ttm)

It's disconcerting to try to make a value decision based on a calculation that is being loaded with numbers that may or may not be appropriate.

At the time of my calculation, the current price was $35.02. The '08 EPS was $2.49.

The trailing diluted EPS was $2.00

Having no idea if these figures are even relevant, I plugged them in to the calculator and came up with a number that indicated that not only is GE undervalued, but it is grossly undervalued - so much so that anyone buying anything other than GE would have to be an idiot - leading me to believe that I'm not using the calculator correctly.

So I'm throwing my two cents in here and asking for an explanation of how to calculate PEG in terms simple enough for any Fool to understand (pun intended). I'd also like to know where to find the numbers, as well as what information is equivalent and what isn't.

I think the calculator is a great idea, but not if the data needed is impossible to get to because it either doesn't exist, like a five year estimate, or is hiding under another name.
An update to the article would be appropriate, I think.

Ensign Suder.
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Author: Delwin Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1970 of 2003
Subject: Re: PEG Ratio Date: 4/9/2007 7:55 AM
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Hi ES

You can get all the information you need from Yahoo Finance. When you call it up, click on investing, put GE into the symbol box and enter. Then click on Key Statistics. It currently has GE rated 1.58 PEG estimated for 5 years. But you can also get estimated 5 year growth rates and estimated earnings.

Keep in mind that this is "estimated". I think that PEG is not considered as good an indicator of value as it was a few years back. It implies that the PE ratio shouldn't exceed the growth rate. At least, that was once the idea, although I don't think there was any evidence to support it.

Hope this helps. If one judges my ability by my portfolio, I certainly won't win any awards for stock valuation.

Delwin

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Author: EnsignSuder Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1971 of 2003
Subject: Re: PEG Ratio Date: 4/9/2007 2:33 PM
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Delwin -

Thanks! Your short answer has been of infinitely more help to me than the hour and a half I spent trying to figure out the PEG calculator.

I'm confused as to why the article hasn't been updated to point newbies like me to this kind of information rather than sending us out on these "Snipe hunts". Maybe its one of the MF rites of initiation.

It's a little expasperating to find out that the ratio I'm trying to compute is already published somewhere, but its a good learning moment for me.

Thanks again.

ES

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Author: dht106 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1990 of 2003
Subject: Re: PEG Ratio Date: 1/3/2008 7:39 PM
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You can find future earnings growth estimates, EPS estimates, and estimated future P/E ratios in Value Line Investment Survey which you can probably find at your public library.

DHT

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