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Does the PEG ratio add value?
Dissertation (MBA)--University of Pretoria, 2012.
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University of Pretoria
2013
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| _version_ | 1867613501330030593 |
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| access_status_str | Open Access |
| author2 | Ward, Mike |
| author_browse | Ward, Mike |
| author_facet | Ward, Mike |
| collection | Thesis |
| dc_rights_str_mv | © 2012 University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria. |
| description | Dissertation (MBA)--University of Pretoria, 2012. |
| format | Thesis |
| id | oai:repository.up.ac.za:2263/29795 |
| institution | University of Pretoria (South Africa) |
| last_indexed | 2026-06-10T12:37:09.154Z |
| license_str | Other — see source repository |
| provenance_str_mv | Harvested via OAI-PMH from UPSpace — University of Pretoria Institutional Repository |
| publishDate | 2013 |
| publishDateRange | 2013 |
| publishDateSort | 2013 |
| publisher | University of Pretoria |
| publisherStr | University of Pretoria |
| record_format | dspace |
| source_str | UPSpace — University of Pretoria Institutional Repository |
| spelling | oai:repository.up.ac.za:2263/29795 Does the PEG ratio add value? Ward, Mike ichelp@gibs.co.za Hodgskiss, Dean Leslie UCTD Peg ratio P/e ratio Analyst forecasts Compound annual growth rate Value shares Dissertation (MBA)--University of Pretoria, 2012. Warren Buffet started an investment partnership of $100 in 1956 and has gone on to accumulate a personal net worth of over $60 billion. He started primarily as a value investor, and gradually changed over time to a strategy which uses the PEG ratio as its main tool. Peter Lynch, one of the most successful fund managers in history and had a compound annual growth rate of 29% for 13 years, was the man to first introduce the world to the PEG ratio. With such prominence, however, widespread use of previously successful strategies tend to render them ineffective due to everyone using them, and today the PEG ratio’s effectiveness as a valuation tool remains a topical debate between market commentators.This study sets out to determine if the PEG ratio adds value using JSE Main Board data from 2002 to 2012. Returns from five portfolios constructed directly from share quintiles based on PEG ratio magnitude are compared to returns of a portfolio constructed from the optimum quintile of value shares. The PEG ratio portfolio returns are examined based on 3 rebalancing period strategies, and on relative performance between the quintiles within each strategy.It is found that a 24 monthly rebalancing strategy provides superior returns to that of 3 or 12 monthly rebalancing for PEG quintiles of selected stocks. Furthermore, the lowest PEG ratio quintile in this strategy outperforms the value portfolio by a compound annual growth rate of 4.3%. The second lowest PEG ratio quintile portfolio performs slightly better to ensure that 40% of stocks selected based on the PEG ratio produced sustained superior returns to the optimum quintile value portfolio. Gordon Institute of Business Science (GIBS) unrestricted 2013-09-07T16:40:23Z 2013-04-30 2013-09-07T16:40:23Z 2013-04-25 2012 2013-02-16 Dissertation Hodgskiss, DL 2012, Does the PEG ratio add value?, MBA dissertation, University of Pretoria, Pretoria, viewed yymmdd < http://hdl.handle.net/2263/29795 > F13/4/170/zw http://hdl.handle.net/2263/29795 http://upetd.up.ac.za/thesis/available/etd-02162013-181833/ © 2012 University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria. application/pdf University of Pretoria |
| spellingShingle | UCTD Peg ratio P/e ratio Analyst forecasts Compound annual growth rate Value shares Does the PEG ratio add value? |
| title | Does the PEG ratio add value? |
| title_full | Does the PEG ratio add value? |
| title_fullStr | Does the PEG ratio add value? |
| title_full_unstemmed | Does the PEG ratio add value? |
| title_short | Does the PEG ratio add value? |
| title_sort | does the peg ratio add value |
| topic | UCTD Peg ratio P/e ratio Analyst forecasts Compound annual growth rate Value shares |
| url | http://hdl.handle.net/2263/29795 http://upetd.up.ac.za/thesis/available/etd-02162013-181833/ |