Re: PEG ratio: was [CANSLIM] VRNT

From: "Rolf Hertenstein" <rolfh@mindspring.com>
Subject: Re: PEG ratio: was [CANSLIM] VRNT
Date: Fri, 6 Jun 2003 11:53:52 -0600

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Just curious if folks here use the PEG ratio at all.  I'm sure it's called
different things but it's the trailing P/E divided by the projected annual
EPS growth rate. And I'm sure whether trailing or forward P/E is used and
whether projected growth over 1, 2, 3 years is used varies as well.  Of
course, the PEG is only as accurate as the EPS estimate.

The idea is that a 'fairly valued' stock has a PEG = 1.0, a PEG < 1.0 makes
it 'undervalued', while a PEG > 1.0 makes it 'overvalued'.  So a P/E of 80
is just fine if annual EPS is growing 80% or more, but the stock with P/E of
80 is risky if the annual EPS growth is, e.g., 40%.

This always made sense to me and given two equally good CANSLIM candidates,
I've favored the lower PEG stock.  WON might cringe at the notion - oh well.
I wonder if institutions use this or a similar gauge beyond simple P/E in
deciding growth stock buy/sell strategy.

Any thoughts?

 Rolf

> I don't pay attention to analysts.....
> The same would hold true for the PE,


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