KRKNF PEG Ratio Computation based On Michael Sikand Forecasts
<<< Peter Lynch (born January 19, 1944) is an American investor, mutual fund manager, author and philanthropist. As the manager of the Magellan Fund at Fidelity Investments between 1977 and 1990, Lynch averaged a 29.2% annual return, consistently outperforming S&P 500 stock market index and making it the best-performing mutual fund in the world. During his 13-year tenure, assets under management increased from US$18 million to $14 billion. >>>
<<< The 'PEG ratio' (price/earnings to growth ratio) is a valuation metric for determining the relative trade-off between the price of a stock, the earnings generated per share (EPS), and the company's expected growth.
In general, the P/E ratio is higher for a company with a higher growth rate. Thus, using just the P/E ratio would make high-growth companies appear overvalued relative to others. It is assumed that by dividing the P/E ratio by the earnings growth rate, the resulting ratio is better for comparing companies with different growth rates.
The PEG ratio is considered to be a convenient approximation. It was originally developed by Mario Farina who wrote about it in his 1969 Book, A Beginner's Guide To Successful Investing In The Stock Market. It was later popularized by Peter Lynch, who wrote in his 1989 book One Up on Wall Street that "The P/E ratio of any company that's fairly priced will equal its growth rate", i.e., a fairly valued company will have its PEG equal to 1. The formula can be supported theoretically by reference to the Sum of perpetuities method. >>>
As an example, I did a PEG ratio computation for Kraken based on Michael Sikand's forecasts, converted to US currency. EPS will be $0.32 in 2026, rising 59% to $0.51 in 2027, rising 33% to $0.68 in 2028, rising 18% to $0.81 in 2029, and rising 11% to $0.90 in 2030, giving a 4 year CAGR of 30%. The current price is $4.80, so the forward P/E ratio is 15 = $4.80/$0.32. Thus the PEG ratio is a very low 0.5 = 15/30, indicating that Kraken is very reasonably priced. Caveat Emptor! |
