Peter Lynch's PEG_Y

Subject : Peter Lynch's PEG_Y

By : ATC

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G = Growth

Y = Dividend Yield, DY

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For PEG_Y = 1:

P/E = G_Y

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How to derive the G_Y?

(1)

Assumption:

Gni = Gd

Invested Capital Growth is excluded.

Then,

(1+Gni) ≤ (1+G_Y) ≤ (1+Gni) × (1+DY)

Or

Gni ≤ G_Y ≤ 100 × [ (1+Gni) × (1+DY) - 1 ]

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(2)

Assumption:

Gni = Gd

Invested Capital Growth is included.

Then,

(1+Gni)²/(1+Gic) ≤ (1+G_Y) ≤ (1+Gni)²/(1+Gic) × (1+DY)

Or

100 × [ (1+Gni)²/(1+Gic) - 1 ] ≤ G_Y ≤ 100 × [ (1+Gni)²/(1+Gic) × (1+DY) - 1 ]

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Remark:

Peter Lynch’s insight is deep.

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Reference:

https://open.substack.com/pub/absolutetoal/p/the-buffett-munger-profitability?utm_source=share&utm_medium=android&r=5g11d4