Given the huge difference in what is value and what looks cheap due to one financial ratio, more often than not, relying on PE may lead to wrong investment decisions. It is better to use PEG ratio when looking for long term investment. though finding the right ratio is itself a challenge.
Because it is easy to calculate and understood by a large majority among the valuation ratios, PE ratio is one of the most overused and misused ratios. It is used by all and sundry to justify their valuations and create mirage of value. Right from investor presentations to research reports, one will find its mention everywhere. But is this the right matrix to look at ? The answer is no, there is a better option. The PEG ratio is a better option.
10 mins read
Mar 19, 2023, 12:16 PM IST
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