Don Kaufman, co-founder of TheoTrade, shared his trading insight with the personal finance reporter at Insider for the story “The PEG ratio is one tool you can use to find undervalued stocks. Here’s how it works.”
Don discussed the topic “What does the PEG ration tell you?” An excerpt:
“P/E ratios vary so widely because of the difference in the earnings outlook of a company, so it doesn’t do well comparing different industries or fundamental stock types,” says Don Kaufman, co-founder at the trading education firm TheoTrade. “Since the PEG ratio normalizes the P/E by dividing it by analyst estimates for EPS growth, you can now compare companies across the spectrum. That makes this measure valuable as an initial filter for finding value companies.”
Read the full story on Insider.
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