Welcome to Indian Share Market
www.DayTradingShares.com
buy stock,buy back shares,buy and sell,best buy stocks,buy or sell sugar stocks,buy sell,online stock,buying selling,shares to buy,purchase,sell share,buy back,in India,prices,back,trading,buying,how to online prices,sharemarket sugar companies industries,news sugar industries shares tips,trading,how to invest in,investment in,learn share market price rates
investment,financial investment,companies,finance,funds,market,investment online services,return on investment,best,bond,bonds,corporate,bse India,bse live,market,bse trading,high return,high yield,advice,growth,information,opportunities,securities,strategy,long term trading,shares,stocks,stock market,bse sensex,value,delivery based trade,delivery based trading,delivery trade,delivery trading,short term,mid term,how to invest,investing,how to make money,internet business,financial planning,online business,nifty,nse India,nse live,online money making profit,investing online,make money on internet,quick,margin trading,opportunity,fund,program,nse trading,sensex,nifty,nse market
Your Desire to Earn
Home|Free Technical Charts|Free Advice|Useful Sites|Suggestions/Complaints|
Stocks for Investment|Readers|Our Target|Demat Account Opening|Free Subscription|Contact Us|
Disclaimer: Information presented on this site is a guide only. It may not necessarily be correct and is not intended to be taken as financial advice nor has it been prepared with regard to the individual investment needs and objectives or financial situation of any particular person. Stock quotes are believed to be accurate and correctly dated, but www.daytradingshares.com does not warrant or guarantee their accuracy or date.
www.daytradingshares.com takes no responsibility for any investment decisions based on recommendations provided on website.
Financial contents like Technical charts, historical charts and quotes are taken from NSE and Yahoo sites.
Note - All quotes are delayed by 15 minutes and unless specified.

Google Adsense Ads are posted on every page of the website so visitors clicking on Ads and going to those links and carrying any financial deal is not at all related to www.daytradingshares.com and any financial deal should be done on their own sole responsibility.
Please read at
www.daytradingshares.com/disclaimer.php before using any material or advice given at www.daytradingshares.com
Copyright © 2005-2012 DayTradingShares.com. All Rights Reserved
Understanding the Projected Earning Growth (PEG ratio)
Understanding the Projected Earning Growth (PEG ratio)

In our article on Price to Earnings Ratio or P/E , we noted that this number gave you an idea of what value the market place on a company’s earnings.

The P/E is the most popular way to compare the relative value of stocks based on earnings because you calculate it by taking the current price of the stock and divide it by the Earnings Per Share (EPS). This tells you whether a stock’s price is high or low relative to its earnings.

Some investors may consider a company with a high P/E overpriced and they may be correct. A high P/E may be a signal that traders have pushed a stock’s price beyond the point where any reasonable near term growth is probable.

However, a high P/E may also be a strong vote of confidence that the company still has strong growth prospects in the future, which should mean an even higher stock price like in FMCG stocks.
Because the market is usually more concerned about the future than the present, it is always looking for some way to project out. Another ratio you can use will help you look at future earnings growth is called the PEG ratio.

The PEG factors in projected earnings growth rates to the P/E for another number to remember.

You calculate the PEG by taking the P/E and dividing it by the projected growth in earnings.
PEG = P/E / (projected growth in earnings)
For example, a stock with a P/E of 25 and projected earning growth next year of 15% would have a PEG of 1.66 (30 / 15 = 1.66).

What does the “2” mean? Like all ratios, it simply shows you a relationship. In this case, the lower the number the less you pay for each unit of future earnings growth. So even a stock with a high P/E, but high projected earning growth may be a good value.
The conclusion is lower PEG ratio is preferred so even if PE ratio is at higher side it is accepted.

Looking at the opposite situation; a low P/E stock with low or no projected earnings growth, you see that what looks like a value may not work out that way.

For example, a stock with a P/E of 18 and projected earnings growth next year of 8 equals a PEG of 2.25. This could prove to be an expensive investment compared to previous one.

A few important things to remember about PEG:
• It is about year-to-year earnings growth
• It relies on projections, which may not always be accurate