Consensus PEG Ratio
factor.formula
The consensus PEG ratio calculation formula is:
The price-to-earnings (PE) ratio is calculated using the consensus expected net profit for the next year (FY1):
Expected net profit growth rate:
The meaning of each parameter in the formula:
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Refers to the market trading price of a stock at the current point in time.
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It refers to the average forecast of analysts for the company's net profit in the next fiscal year (FY1), usually obtained by weighted average of earnings forecasts from multiple institutions, representing the market's expectations of the company's short-term profitability.
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It refers to the average forecast of analysts on the company's future net profit growth rate, reflecting the market's expectations of the company's profit growth potential.
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Refers to the average forecast of analysts' net profit for the company's second fiscal year (FY2). Similar to FY1 net profit, it also represents the market's expectation of the company's future profitability, but with a longer time span, which better reflects the company's medium- and long-term growth potential.
factor.explanation
The consensus expected net profit is the average forecast value calculated by integrating the earnings forecast data of multiple institutions (such as securities companies, investment banks, etc.) and using a certain weighting method. Common weighting methods include:
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Arithmetic mean: Directly average the forecast values of all institutions, such as Wind Information using this method.
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Time and institution weighting: Consider the weight of the forecast time and institution at the same time, such as Chaoyang Yongshou using this method, giving higher weights to recent and high-quality institutional forecasts.
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Weighted by forecast accuracy: Different weights are given according to the historical forecast accuracy of each institution, such as Orient Securities using this method, and institutions with more accurate forecasts are given higher weights.
The use of consensus expected data can reduce the impact of individual analysts' forecast bias and more objectively reflect the market's consensus on company earnings. On this basis, the consensus expected PEG ratio further comprehensively considers the company's valuation level and earnings growth potential, and is a more comprehensive and rigorous relative valuation indicator. This indicator can help investors find stocks with high growth potential but whose valuations have not yet been fully reflected by the market.