What’s Wrong with PEG? | Zendy

Charles J. Higgins | Zendy

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What’s Wrong with PEG?

Author(s) -

Charles J. Higgins

Publication year - 2015

Publication title -

journal of finance and bank management

Language(s) - English

Resource type - Journals

eISSN - 2333-6072

pISSN - 2333-6064

DOI - 10.15640/jfbm.v3n2a1

Subject(s) - peg ratio , valuation (finance) , investment (military) , measure (data warehouse) , economics , selection (genetic algorithm) , econometrics , actuarial science , business , computer science , finance , political science , artificial intelligence , law , data mining , politics

PEG is a newer investment ratio measure of a security’s PE ratio divided by the firm’s growth rate as a percentage. It is examined and contrasted with other investment valuation measures. PEG is shown to be problematic in terms of its units of measure, in what it purports to appropriately determine, and it is non monotonic for relatively profitable firms and is only slightly indicative of correct security selection for relatively unprofitable firms.

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