General Topics
Markets
Technical Topics
Brokerage Firms
Company Specific
Community Lounge
Site Support

# 50% Growth, How much P/E? 100% Growth How much P/E?

Discussion in 'Trading' started by qll, Apr 9, 2007.

1. ### qll

If a company's EPS is growing at 50% rate year-over-year, what is the reasonable P/E range for that company?

If a company's EPS is growing at 100% rate year-over-year, what is the reasonable P/E range for that company?

I ask this is because there are tens of Chinese companies currently grow at 100%+ rate and P/E only 50-80

I bought a company growing at 50% rate, and current P/E at 22 and P/B at 2. I think the P/E should be at 40 level.

2. ### nonlinear5

You may want to look at a valuation measure known as PEG, which is (P/E) / (Earnings Growth Rate). For example, if P/E is 20, and earnings growth is 10% a year, the PEG is 2. It's believed that anything below 1 as measured by PEG qualifies as value. I am not sure that it's applicable to Chinese companies, though, because of the accounting methods used.

3. ### qll

peg is forward looking, so many companies on yahoo finance don't have this ratio.

i was looking a past peg ratio, though.

ps:
please relax on chinese accounting methods. they are much cleaner than 2-3 years ago.

4. ### sucre_estave

"Reasonable" is a pretty subjective term. Arguments can be made for ignoring PE altogether if you are a growth investor. PE's of 100 can be a bargain and PEs of 5 could be grossly overpriced.

5. ### Restricted

Triple at least. 50 = 150 , 100=300. The assumption is that the growth will continue forever.

ET IS FREE FOR TRADERS BECAUSE OF THE FINANCIAL SUPPORT FROM THESE SPONSORS: