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PEG ratio. The ' PEG ratio' ( price/earnings to growth ratio) is a valuation metric for determining the relative trade-off between the price of a stock, the earnings generated per share ( EPS ), and the company's expected growth. In general, the P/E ratio is higher for a company with a higher growth rate. Thus, using just the P/E ratio would ...
Earnings growth rate is a key value that is needed when the Discounted cash flow model, or the Gordon's model is used for stock valuation . The present value is given by: . where P = the present value, k = discount rate, D = current dividend and is the revenue growth rate for period i. If the growth rate is constant for to , then,
In corporate finance, [ 1 ][ 2 ][ 3 ] the present value of growth opportunities (PVGO) is a valuation measure applied to growth stocks . It represents the component of the company's stock value that corresponds to (expected) growth in earnings. It thus allows an analyst to assess the extent to which the share price represents the current ...
Valuation using multiples. In economics, valuation using multiples, or "relative valuation", is a process that consists of: identifying comparable assets (the peer group) and obtaining market values for these assets. converting these market values into standardized values relative to a key statistic, since the absolute prices cannot be compared.
An empirical test shows that SPM is substantially more accurate in estimating observed stock market prices than the Gordon Growth Model. SPM and the PEG ratio. The PEG ratio is a special case in the SPM equation. If a company does not pay dividends, and its risk adjusted discount rate is equal to 10%, SPM reduces to the PEG ratio:
Price–sales ratio, P/S ratio, or PSR, is a valuation metric for stocks. It is calculated by dividing the company's market capitalization by the revenue in the most recent year; or, equivalently, divide the per-share price by the per-share revenue. The justified P/S ratio is calculated as the price-to-sales ratio based on the Gordon Growth Model.
Sustainable growth is defined as the annual percentage of increase in sales that is consistent with a defined financial policy (target debt to equity ratio, target dividend payout ratio, target profit margin, target ratio of total assets to net sales ). This concept provides a comprehensive financial framework and formula for case/ company ...
Polyethylene glycol ( PEG; / ˌpɒliˈɛθəlˌiːn ˈɡlaɪˌkɒl, - ˈɛθɪl -, - ˌkɔːl /) is a polyether compound derived from petroleum with many applications, from industrial manufacturing to medicine. PEG is also known as polyethylene oxide ( PEO) or polyoxyethylene ( POE ), depending on its molecular weight. The structure of PEG is ...