Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (1) | Ignore Thread Prev | Next
Author: ribofunk Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 2003  
Subject: Variations on a PEG Date: 9/3/1997 2:20 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
One thing I've noticed about PEGs and YPEGs is they can vary enormously based on which EPS number and which growth rate you use. I purchase a lot of depressed small-cap stocks which often have losses and in which quarterly earnings can vary widely.

I sometimes run several PEGs in order to get one which I feel is most representative. I'd like to hear any opinions on the wisdom of the following:

(a) Using the revenue growth rate instead of earnings growth. Usually revenue growth is more stable and should provide a more conservative number. Also, companies coming out of financial troubles or just turning the profitability corner often show unsustainable earnings growth. In the long run, I would think revenue growth = earnings growth.

(b) For companies with recent losses and/or EPS figues that jump around from quarter to quarter, why not cut a regression line over the past 4 quarters (or more if possible) and use the slope as the growth rate? Most spreadsheets have statistical functions which would make this pretty easy.

(c) What about doing a PEG based on each of the past quaterly EPS and using this as a range for what values to expect in the future? (As you can tell, I tend to be more comfortable with more data points.)

Anyone?


Jack Neefus
College Park, MD
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (1) | Ignore Thread Prev | Next

Announcements

Post of the Day:
Value Hounds

Why is Everyone Still Earnings-Obsessed?
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
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.
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