Lewis adds that he is also positive on AvalonBay's attractive PEG ratios
, low leverage in its balance sheet, and a 2% discount in its valuation relative to net asset value against a 4% average premium in his apartment REIT coverage universe.
While PEG ratios
are supposed to improve the use of P/E ratios by adjusting it with future growth, it fails to make any adjustments for risks as potential source of differences in valuation.
We view its 2012-13E PEG ratios
, which are also lower than its EM peers, as generous.
Investment advisors who make individual investment decisions on publicly-traded securities rely upon a wide variety of models and fundamental valuation metrics such as earnings per share, price-to-earnings, price-to-sales, growth rates, return on invested capital, PEG ratios
, market cap, enterprise value and EBITDA multiples.
The perfect peg Stocks with PEG ratios
of less than 1 are considered undervalued relative to their EPS growth rates, whereas those with ratios of more than 1 are considered overvalued.
Arak and Foster (2003) develop some implications for the PEG ratio
to explain the observed high PE and PEG ratios
during the late 1990s.
Commenting on the Oryx Fund Standard & Poors said, "The investment approach is very methodical and structured, emphasising bottom-up selection of companies with low PEG ratios
and good management."
are not the only buy sign, but they are important, says Monica Walker, co-manager of the Lou Holland Growth fund (LHGFX), which also follows a GARP strategy.
To take measurement of value a step further, investors must look at price to earnings to growth, known as PEG ratios
To summarize, these correlations suggest that the bias in the estimate of the expected rate of return based on the PEG ratio
will be higher for firms with higher PE, higher PEG ratios
, lower book-to-price ratios, lower standard deviation of past returns, and higher market capitalization.
The share looks cheap priced at discounts to its EM peers on PEG ratios
. Moreover, the company has provided a disclosure of its recent corporate actions, the lack of which may have been the reason for the 11.5% stockprice decline since midJune 2011.
The share price has declined 41% over the past three months and the stock now trades at massive discounts to EM peers on PEG ratios